August inflation drops, food prices stabilize

The Philippines’ inflation rate fell to 3.3% in August 2024, marking the lowest level since January, as targeted government interventions successfully stabilized food prices.

Finance Secretary Ralph Recto highlighted the impact of these measures, noting that continued vigilance would sustain the downward momentum.

“We will not be complacent. While we are now seeing the positive results of our measures, we are proactively monitoring potential inflationary risks to address them in a timely and targeted manner,” Recto said.

Headline inflation dropped within the Bangko Sentral ng Pilipinas’ forecast range of 3.2% to 4.0%, and lower than the 3.6% predicted by private analysts.

Year-to-date, the average inflation stands at 3.6%, comfortably within the government’s target band of 3% to 4% for the year.

The decline in food prices was a key factor in the inflation drop, with the inflation rate for food and non-alcoholic beverages falling to 3.9% in August from 6.4% in July.

Notably, rice inflation slowed to 14.7% from 20.9%, largely due to the implementation of the government’s reduced rice tariff policy.

“The lower rice tariffs are already showing results. Rice inflation is slowing down and rice imports grew by 77% in August. We expect rice prices to drop more noticeably in September as the rice imported at lower tariffs in August reaches the local market,” Recto said.

Transportation costs also saw improvement, with a 0.2% decline compared to a 3.6% increase in July.

Core inflation, which excludes volatile items, fell to 2.6% in August from 2.9% the previous month. This deceleration in prices supports the Bangko Sentral ng Pilipinas’ decision to cut interest rates by 25 basis points in August.

Efforts to Address Inflation

The Department of Agriculture (DA) is ramping up targeted efforts to further alleviate inflationary pressures, particularly for food items.

The DA recently extended the ship-out date for imported rice, allowing local importers more time to secure better rates, which is expected to reduce retail prices.

To ensure food security, the government is also supporting the extension of the Rice Competitiveness Enhancement Fund (RCEF) until 2030, with plans to enhance local rice production.

Additionally, the KADIWA ng Pangulo program, which provides affordable agricultural products, will expand to Visayas and Mindanao, with rice priced at PHP 29 per kilo to assist vulnerable sectors.

The DA is also addressing potential challenges from African swine fever (ASF) by procuring vaccines and offering incentives to affected swine raisers.

Water management strategies are being prepared in anticipation of La Niña, with measures such as desilting irrigation canals and repairing irrigation systems.

Meanwhile, efforts to manage non-food inflation include the staggered implementation of electricity rate hikes to minimize the impact on consumers.

“The sustained drop in inflation will boost our household consumption for the rest of the year as well as encourage more investments, particularly as borrowing costs decrease,” Recto said.