The rate of inflation rose to a two-month high of 5.3 percent in August after dropping for the last six months, the Philippine Statistics Authority (PSA) said Tuesday, blaming higher prices of food — particularly rice — and non-alcoholic beverages for the increase.
National Statistician and Civil Registrar General Dennis Mapa said in an online briefing that this was still significantly slower than the 6.3 percent a year ago, and brought average inflation in the first eight months to 6.6 percent, which is well over the government’s target range of 2 to 4 percent.
Mapa said food and non-alcoholic beverages, a large component in the inflation index, rose to 8.1 percent during August, up from 6.3 percent in the previous month.
Increases in transport; recreation; housing, water, electricity, gas, and other fuel costs during the month also contributed to the rise in inflation.
Food inflation at the national level rose to 8.1 percent in August 2023 from 6.3 percent in July 2023. In August 2022, food inflation was lower at 6.5 percent.
Mapa said that the overall inflation usually goes up if the price of rice increases, as rice accounts for 9 percent of the consumer basket.
He said the bottom 30 percent of households feel the impact of higher rice prices most acutely.
Mapa said in August 2023, regular milled rice averaged P43.34 nationwide, up 8.9 percent year on year, while well-milled rice averaged P47.63, higher by 8.1 percent.
Mapa also said higher prices of vegetables during the month as a result of losses due to typhoons also contributed to higher inflation.
Mapa could not say what the impact of recent price ceilings on rice would be, saying any differences in price would be seen in the middle of September at the earliest.
While the average rate of inflation is above government targets, the August rate of 5.3 percent is within the central bank’s forecast range of 4.8 percent to 5.6 percent for the month.
The Bangko Sentral ng Pilipinas said inflation could be expected to remain high in the coming months due to the impact of supply shocks on food prices and rising oil prices in the world market.
It expected inflation to drop within the target range by the fourth quarter, however.
The National Economic and Development Authority assured the public that the government will strengthen its measures to ensure food security, protect consumers, and provide assistance to farmers.
“Despite the ongoing challenges we encounter, such as severe weather conditions and trade limitations imposed by other nations, our objective remains to achieve an inflation rate between 2 and 4 percent by the year’s end,” NEDA Secretary Arsenio Balisacan said.
Rice inflation increased to 8.7 percent in August from 4.2 percent in July 2023. The expected reduction in rice production due to El Niño and the export ban recently imposed by major rice exporters such as India and Myanmar led to higher international rice prices, Balisacan said.
“In addition, the alleged hoarding incidents, artificial shortage, and speculative business decisions of market players may have put further upward pressure on the domestic retail price of rice,” he said.
Vegetable inflation, on the other hand, rose to 31.9 percent from 21.8 percent due to production losses from the enhanced monsoon rains and Super Typhoon Egay.
Balisacan said that the government also needs to speed up the rollout of the Food Stamp Program, which will provide P3,000 worth of food credits to target beneficiaries each month for six months.
Albay Rep. Joey Sarte Salceda said the August inflation hitting at 5.3 percent was expected.
“Rice, corn, and flour drive the vast majority of food inflation,” he said. “Apart from the ongoing Russia-Ukraine conflict, which has driven world prices of grain upward to historic levels, the Indian export ban on rice has disrupted global rice supply. Next to China, we are the world’s largest importer of rice, so it was bound to affect us first.”
At the same time, Salceda said he expects the downward trend in the year-on-year inflation rate to resume in September and towards the end of the year.
