Cabinet tackles rising consumer prices, to keep food supply affordable
Inflation rose to a four-year high of 6.9 percent in September from 6.3 percent a month ago, driven mainly by faster increases in the price of food and non-alcoholic beverages, the Philippine Statistics Authority (PSA) said Wednesday.
Even as the Department of Finance (DOF) said consumer prices are expected to remain high for the rest of the year, President Marcos said will monitor the price of goods and ensure that food supply is sufficient and affordable.
“In our meeting today with the Cabinet, we adopted the next steps to monitor the price of goods. We will ensure that the food supply can be adjusted to be sufficient and affordable for the Filipino people,” Mr. Marcos said in a Facebook post.
In an online briefing, national statistician and civil registrar general Dennis Mapa did not rule out the possibility of inflation hitting more than 6.9 percent in the coming months.
“There are risks that inflation might accelerate further due to higher food prices… Higher transport fare and the exchange rate have spillover effects on food prices,” Mapa said.
He said inflation rates higher than 6.9 percent were mostly recorded at the height of the global financial crisis in 2008.
He said, “reducing inflation would mean reducing food inflation.”
Mapa also said the stronger dollar would have spillover effects in prices of other commodities. “Crude oil is usually purchased using US dollars.
This will affect other subgroups, particularly food,” he said.
On Monday, the peso fell to a new all-time low of P59 to the US dollar as the greenback gained strength amid financial markets’ expectation of another huge rate increase by the US Federal Reserve next month.
The September 2022 inflation rate of 6.9 percent fell within the Bangko Sentral ng Pilipinas’ forecast range of 6.6 to 7.4 percent for the month. BSP said upside risks continued to dominate the inflation outlook in the near term.
“Price pressures could come from the potential impact of higher global non-oil prices, pending petitions for further transport fare hikes, the impact of weather disturbances on prices of food items, as well as the sharp increase in the price of sugar,” BSP said.
“Meanwhile, the impact of a weaker-than-expected global economic recovery continues to be the main downside risk to the outlook.
Nevertheless, inflation risks are seen to be broadly balanced in the medium-term as global commodity prices ease going forward,” BSP said.
Economic Planning Secretary Arsenio Balisacan said the government’s priority is to make sure that there is sufficient and affordable food supply for every Filipino family.
He said although fuel prices have been declining recently, these have remained elevated resulting in high input costs, especially for farmers and fishers. Thus, one of the strategies of the government is to provide fuel discounts worth P3,000 to each eligible farmer to alleviate the effects of high fuel prices.
As of Sept. 26, 2022, a total of 148,183 accounts for targeted beneficiaries nationwide were created. Of these, 136,988 have been loaded with fuel discounts and 101,743 cards have been issued to corn farmers and fishers. In addition, more than 1.5 million eligible rice farmers are entitled to receive P5,000 cash aid to boost their productivity and help cope with the surging prices of fuel and agricultural inputs.
To ease effects brought about by the recent super typhoon Karding, the Department of Agriculture is allotting over P709 million worth of assistance and interventions, which include immediate repair of damaged production facilities and seed distribution. Despite the damage brought by weather disturbances, the government expects a sufficient supply of rice, chicken, highland vegetables, yellow corn, and white corn throughout the year.
The BSP said its recent policy actions were intended to bring inflation and inflation expectations back to the target to ensure the balanced and sustainable growth of the economy in the medium term.
It said it is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term, consistent with its primary objective to promote price stability.
The BSP has already raised the policy rate by a total of 225 bps since the start of its hiking cycle in May 2022 to rein in the elevated inflation and support the peso, the latest of which was on Sept. 22 when the BSP raised the policy rates by another 50 basis points to 4.25 percent.
PSA data showed that the 6.9 percent inflation rate in September 2022 was primarily due to the higher annual growth rate in the index for food and non-alcoholic beverages at 7.4 percent, from 6.3 percent in August 2022.
This was followed by housing, water, electricity, gas, and other fuels with 7.3 percent annual growth, from 6.8 percent in August 2022. Also contributing to the uptrend in the overall inflation in September 2022 were the higher annual increases in the indices of alcoholic beverages and tobacco, 9.8 percent; clothing and footwear, 2.9 percent; furnishings, household equipment, and routine household maintenance, 3.5 percent; information and communication, 0.5 percent; recreation, sport, and culture, 2.7 percent; restaurants and accommodation services, 4.6 percent; and personal care, and miscellaneous goods and services, 3.4 percent.
On the other hand, lower annual increments were observed in the indices of health at 2.4 percent; transport at 14.5 percent; and education services at 3.5 percent. Meanwhile, financial services retained its previous month’s inflation rate.
Core inflation, which excludes volatile food and energy items in the headline inflation, was lower at 4.5 percent in September 2022, from 4.6 percent in August 2022. In September 2021, core inflation was observed at 2.6 percent.
The acceleration in the food inflation was primarily influenced by the positive annual growth rate in the index of vegetables, tubers, plantains, cooking bananas and pulses at 3.5 percent, from -2.7 percent in August 2022.
Similar to the trend at the national level, inflation in the National Capital Region rose to 6.5 percent in September 2022, from 5.7 percent in August 2022. In September 2021, the inflation rate in the area stood at 3.0 percent.
The acceleration of inflation in the NCR was brought about by the higher annual hike in the food and non-alcoholic beverages index at 8.5 percent, from 6.2 percent in August 2022. Also contributing to the uptrend in the inflation in NCR were the higher annual increases in the indices of housing, water, electricity, gas and other fuels at 5.3 percent; recreation, sport, and culture at 1.5 percent; and restaurants and accommodation services at 5.9 percent.
Following the trend at the national level and in NCR, inflation in areas outside NCR or the provinces increased to 7.0 percent in September 2022, from 6.5 percent in August 2022. In September 2021, inflation rate was lower at 4.5 percent.
In a statement released Wednesday, the DOF said consumer prices are expected to remain high in the remaining months of 2022 due to higher transport and food costs, as well as the pressure brought by a weaker peso and the damage to crops caused by Typhoon Karding.
The DOF said inflation—the rate at which the prices of goods and services rise—is expected to remain elevated for the last quarter of 2022 with the recent fare hike and the impact of Typhoon Karding on food supply.
Hikes in transport fares of jeepneys, buses, taxis, and transport network vehicle services took effect on the first Monday of October.
Typhoon Karding destroyed 170.762 hectares of farm lands across Luzon and parts of the Visayas, with a total value loss of P3.12 billion and volume of crop damage of 158,117 metric tons, which affected 108,594 farmers and fishers.
Also on Wednesday, a labor group demanded a P100 wage hike to recover lost value of wages due to inflation.
In a statement, the NAGKAISA said workers in the National Capital Region have already lost at least P80 in the value of their wages due to inflation.
Nagkaisa spokesman Renato Magtubo said their demand is merely for the recovery of the lost value of wages due to inflation and not yet for the rise in workers’ standard of living, which is only possible through a living wage, which the group puts at P1,200 to P1,300 a day.
The current minimum wage in NCR is P570 per day but its real value today, according to Nagkaisa, is only P488y.
Nagkaisa said it will work to have a bill amending the wage setting mechanism passed while letting its affiliates file appropriate petitions in their respective regions as the situation would be more difficult in some regions where inflation rates are much higher than NCR.