Inflation in February eased to 8.6 percent from a 14-year high of 8.7 percent in January mainly due to a decline in the transport index, the Philippine Statistics Authority (PSA) said Tuesday.
News of the slight decline in inflation came as the Palace announced the creation of an Economic Development Group headed by Finance Secretary Benjamin Diokno, and co-chaired by the National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan.
The February inflation was significantly higher than the 3 percent registered a year ago, and well over the target range of 2 percent to 4 percent.
National statistician and civil registrar general Dennis Mapa said in an online briefing that among the 13 commodity groups, “transport was the sole driver of the downtrend of the overall inflation during the month, recording a 9.0 percent inflation rate in February 2023 from 11.1 percent inflation in January 2023.”
Mapa cited the lower prices of diesel and gasoline for the month, which contributed to the decline in inflation in the transport index.
In contrast, nine commodity groups showed higher inflation rates which includes food and non-alcoholic beverages, 10.8 percent; alcoholic beverages and tobacco, 11.0 percent; clothing and footwear, 4.8 percent; furnishings, household equipment and routine household maintenance, 6.2 percent; health, 4.0 percent; information and communication, 0.8 percent; recreation, sport and culture, 4.4 percent; restaurants and accommodation services, 8.1 percent; and personal care, and miscellaneous goods and services, 5.3 percent.
Mapa said food inflation at the national level slowed down to 11.1 percent in February 2023, from 11.2 percent in January 2023. In February 2022, food inflation rate was at only 1.1 percent.
Mapa said the dip in food inflation was brought about by the lower year-on-year growth in the index of vegetables, tubers, plantains, cooking bananas, and pulses.
The 8.6 percent registered in February was within the central bank’s forecast range of 8.5 percent to 9.3 percent of the month.
Balisacan said the government will need to recalibrate its strategies to alleviate the impact of higher commodity prices on consumers.
“We must rethink our strategies to combat rising food prices. The country’s current high inflation is largely driven by domestic, supply-side constraints,’ Balisacan said.
He said agricultural imports were ill-timed and food supplies have been inadequate. He said the solution is to get to the root of the problem, including fixing the bottlenecks along all segments of the agricultural value chain.
“We recommend the urgent creation of a high-level inter-agency committee to advise the President and the Cabinet on measures to keep food prices stable and ensure food security for all Filipinos, especially the poor whose expenditures are largely constituted by food. We must immediately address this issue if we are to remain on track to meeting our poverty reduction targets for the medium term,” he said.
Balisacan also mentioned the importance of targeted social protection programs in helping the nation’s poorest families and vulnerable sectors cope with the impact of inflation.
Balisacan said these short-term assistance programs would be complemented by productivity- and efficiency-enhancing measures in the medium term, as outlined in the Philippine Development Plan 2023-2028.
While the inflation rate at the national level for February 2023 slowed down, in contrast, inflation in the National Capital Region increased further to 8.7 percent from 8.6 percent in January 2023. In
February 2022, inflation in the area stood at 1.9 percent.
The main driver in the higher inflation rate in the area was housing, water, electricity, gas and other fuels commodity group whose index registered a year-on-year increase of 7.7 percent during the month from 6.9 percent in January 2023.
Price increases in furnishings, household equipment and routine household maintenance with 6.9 percent inflation rate and restaurants and accommodation also drove the rate higher.
In the areas outside the National Capital Region, inflation decreased to 8.5 percent in February 2023 from 8.7 percent in January 2023, following the trend at the national level. In February 2022, inflation in the area was recorded at 3.4 percent.
Earlier, Bangko Sentral ng Pilipinas Governor Felipe Medalla said that monetary authorities remained hawkish and ready to act accordingly if inflation in February continued to accelerate.
He said the most likely scenario could be one more rate hike but that could change depending on the trajectory of inflation.
Meanwhile, in a press briefing at the Palace, Diokno said the purpose of the new group would be to “address the country’s economic concerns.”
Diokno, who met the President on Tuesday, said they also identified long-term legislation that need to be passed, such as the New Agrarian Emancipation Act.
Passed by both houses of Congress, the bill seeks the debt condonation of agrarian reform beneficiaries, which is now pegged at P58 billion.
The administration will also push for the passage of the National Land Use Act, under which the government will allocate land for agricultural and fishery production, settlement and infrastructure development, transportation, communication, water resources, as well as social infrastructure.
Under the Land Use Act, Diokno said agricultural lands will be protected and land conversion into other uses such as housing will not be allowed.
There is also a proposal on livestock development and competitiveness, addressing poultry and swine industries.
As part of efforts to cut inflation, Diokno recommended to the President to focus on the production and productivity of the agricultural sector.
“We have to focus on agriculture production and productivity. We already have many programs in the budget that focus on agricultural production,” Diokno said.
The Finance chief food is still the main contributor or cause of the acceleration of the inflation rate.
He also called for the ramping up of the processing and release of imported goods at the ports.
“Because there are requirements that delay the release of the product.. when you import before you can release it to customs, there are many necessary requirements so these are again part of the recommendation.” Diokni said.
“For example, fast tracking government processes on clearances for agricultural goods. For example, removal of the certificate of necessity to import or CNI for fish; then digitize and centralize the sanitary and phytosanitary import clearance system,” he added.
The government also will continue distributing assistance to the sectors heavily affected by inflation one of which was the P500 government aid to the poorest households in the country for two months.