Inflation rate in March 2023 eased to a six-month low of 7.6 percent from 8.6 percent in February on slower increases in the prices of food and non-alcoholic beverages index, the Philippine Statistics Authority said Wednesday.
The March print was the lowest since the 6.9 percent in September 2022. This, however, remained elevated compared to the 4 percent a year ago.
This also brought the average in the first quarter to 8.3 percent, above the 2023 target range of 2 percent to 4 percent.
National statistician and civil registrar general Dennis Mapa said in a briefing that among the 13 commodity groups, the continued downtrend of the overall inflation in March was mainly brought about by the heavily-weighted food and non-alcoholic beverages, which recorded a lower inflation rate of 9.3 percent compared to 10.8 percent in February.
“This was followed by transport with an inflation rate of 5.3 percent from 9.0 percent in the previous month. The third primary driver of the downtrend of the headline inflation during the month was housing, water, electricity, gas and other fuels, which recorded a 7.6 percent inflation rate from 8.6 percent in February 2023,” he said.
Other commodity groups that contributed to the downtrend in the March inflation were health and information and communication commodity groups, which registered lower inflation rates during the month at 3.9 percent and 0.7 percent, respectively, compared with their previous month’s inflation rates.
Higher inflation rates were observed in alcoholic beverages and tobacco, 12.2 percent from 11.0 percent; clothing and footwear, 5.0 percent from 4.8 percent; recreation, sport and culture, 4.6 percent from 4.4 percent; restaurants and accommodation services, 8.3 percent from 8.1 percent; and personal care, and miscellaneous goods and services, 5.6 percent from 5.3 percent.
Food inflation at the national level continued to move downward at 9.5 percent in March from 11.1 percent in February. In March 2022, food inflation was lower at 2.8 percent.
“As in the previous month, the primary driver of slower food inflation was the lower annual growth in the index of vegetables, tubers, plantains, cooking bananas and pulses at 20.0 percent from 33.1 percent in February 2023. This was followed by meat and other parts of slaughtered land animals at 4.6 percent from 6.5 percent, and sugar, confectionery and desserts at 35.2 percent from 37.0 percent,” Mapa said.
Core inflation, which excludes selected food and energy items in the headline inflation, rose further to 8.0 percent in March from 7.8 percent in February. Core inflation in March 2022 was 2.2 percent. The average core inflation for the first quarter of 2023 stood at 7.7 percent.
Following the trend at the national level, inflation rate in NCR also decelerated to 7.8 percent in March from 8.7 percent in February. In March of the previous year, inflation rate in the area was recorded at 3.4 percent.
The National Economic and Development Authority assured the public that the government is committed to addressing the root causes of high food prices.
NEDA Secretary Arsenio Balisacan said that while inflation was beginning to slow down, it remained the most pressing issue that the government should monitor and urgently address.
“Protecting the purchasing power of Filipinos, especially the most vulnerable sectors of the economy, is one of the top priorities of the administration, which we have also laid out in the Philippine Development Plan 2023-2028. We are committed to provide policy advice and anticipatory recommendations that are supported by data to manage inflation and protect the Filipino families,” he said.
President Ferdinand Marcos Jr. on March 7, 2023 approved the creation of the Inter-Agency Committee on Inflation and Market Outlook.
The committee functions as an advisory body on strategies to alleviate inflation and ensure food and energy security, while balancing the interests of domestic food producers, consumers and the broader economy.
Balisacan said that the inflation outlook remains vulnerable to upward risks due to global supply uncertainties, impending wage adjustments and increases in service fees.
The Inter-Agency Committee on Inflation and Market Outlook promptly convened to establish coordination mechanisms for data gathering, assessment and monitoring of supply and demand conditions that exert inflationary pressures.
“By streamlining data collection, the government can share a common understanding, particularly regarding data that can inform public policy and aid in the monitoring and management of inflation,” Balisacan said.
Balisacan said that the committee’s objective is to offer proactive policy recommendations regarding emerging threats to food supply, such as the potential escalation of African Swine Fever and the weather disturbances linked with the El Niño phenomenon.
“We need a robust monitoring system and forecasting tools supported by reliable and timely information that will assist us in offering appropriate recommendations to the President and the Cabinet. These will help us in developing suitable policies and interventions to achieve food and energy security, while ensuring that our country stays on course to sustained economic transformation and inclusive growth,” he said.
The Inter-agency Committee on Inflation and Market Outlook which is in charge of closely monitoring the main drivers of higher consumer prices in the country is expected to make a recommendation soon on how to address inflation which is one of the highest in the region, Finance Secretary Benjamin Diokno said Tuesday.
The creation of the IAC-IMO was approved in a sectoral meeting on March 7, 2023 by President Ferdinand Marcos Jr. as a proactive measure to fight inflation. It serves as an advisory body to the Economic Development Group on measures that will keep inflation, particularly on food and energy, within the government’s target range.
“The IAC-IMO will continue to hold technical level meetings throughout April to assess the drivers of food and non-food inflation and recommend policies to mitigate the impact of inflationary pressures,” Diokno said in a statement.
“The principals-level IAC-IMO is scheduled to meet by end-April, while the first EDG meeting will be conducted on April 26, 2023,” Diokno said.
The committee is also in charge of assessing the supply and demand of essential food commodities, monitoring external and internal shocks, facilitating data-sharing among concerned agencies and providing timely recommendations to curb price spikes.
It also regularly monitors data such as farm gate, wholesale and retail prices; volume of local production and area harvested/planted; stocks inventory; sanitary and phytosanitary import clearance issuances and actual import arrivals; geospatial, climate, and satellite data; and damage and losses due to calamities and disasters, which are necessary to assess food prices and the supply-demand situation.
The committee is co-chaired by the secretaries of the Department of Finance and the National Economic and Development Authority, while the secretary of the Department of Budget and Management serves as the vice chairman.
Members of the committee include the Department of Agriculture, Department of Energy, Department of Science and Technology, and Department of Trade and Industry. The DOF serves as the committee’s secretariat.
Diokno said NEDA Secretary Arsenio Balisacan convened the committee in a roundtable discussion on April 3, 2023 for a rundown of strategies to streamline data-gathering tools for the conduct of timely analysis in mitigating inflation.
To provide additional information on the local production of key commodities, the committee will be tapping advanced technologies to complement traditional modes of data and analysis. This will allow the committee to submit a complete and detailed assessment of the country’s market outlook.
“[B]ased on our initial scoping and conversations with different agencies, there are various frameworks and tools that use satellite imagery to analyze demand and supply of key commodities,” Diokno said.
First is the Philippine Rice Information System, which is an operational system for nationwide rice monitoring that identifies the scale and magnitude of production gaps in rice.
With the use of Earth Observation technologies, crop growth simulation models and information technology, PRiSM provides timely information on rice area; start of season maps or planting dates; yield estimates, mid-season forecast, and end of season yields; and extent of area affected by flood or drought.
The project is already institutionalized and housed within the Philippine Rice Research Institute.
Second is the Project Smarter Approaches to Reinvigorate Agriculture as an Industry in the Philippines – an action-research program that provides agricultural stakeholders with site-specific advisories in order to mitigate climate risks.
Project SARAI provides in-season crop forecasts and yield estimates; assessment of droughts and availability of rainfall; and crop advisories on how to maximize crop growth while addressing potential pest or disease problems.
Finally, the Data Analytics Technologies and Operation Services for Space Data project developed by the DOST-Advanced Science and Technology Institute uses remote sensing, space technology and data science applications to support critical activities on disaster mitigation, analysis, and advice.
The Philippine Space Agency also uses satellites for disaster risk management, defense and security, and planning and econometrics.
“We want to introduce science into decision making and that’s what we’re going to do,” Diokno said.
The committee is in close coordination with the Philippine Statistics Authority, Philippine Space Agency, DOST – ASTI and various government agencies in order to apply advanced science and technology into their assessments.
“We need to increase production domestically and we need to increase productivity in agriculture because if we compare our agricultural output with other countries, we are way behind,” Diokno said.
Inflation blew past the target range last year and even reached a 14-year high of 8.7 percent in January 2023 before easing a bit to 8.6 percent in February.
The elevated inflation forced the BSP raised on March 23 the key interest rates by 25 basis points to 6.25 percent.
The BSP earlier said inflation likely slowed to as low as 7.4 percent in March from 8.6 percent in February on lower prices of petroleum and some food items.
The BSP projected the March 2023 inflation to settle within a range of 7.4 percent to 8.2 percent. The government is scheduled to release the March inflation on April 5.
