Joint statement on Sept inflation

We, the government’s Economic Team, understand that many are feeling the hit of a faster inflation rate, particularly those who toil so hard just to keep up. We assure everyone that we are working swiftly to temper the rise in the prices of goods and offer relief to those most affected. We remain committed to our goal of ensuring price stability, along with our overarching aim of translating sustained broad-based economic growth to comfortable lives for everyone.

Today, the Philippine Statistics Authority reported that headline inflation increased in September 2018 to 6.7 percent, up by 0.3 percentage points from the previous month’s 6.4 percent. This is slightly lower the median market expectation of 6.8 percent and within the 6.3 to 7.1 percent forecast of the Bangko Sentral ng Pilipinas.

Prices of food and non-alcoholic beverages continue to be the main inflation drivers. Supply disruptions caused by the onslaught of Typhoon Ompong in the regions of Ilocos, Cagayan, and Cordillera Autonomous Region put upward pressures on food prices.

Damage to agriculture, including facilities and infrastructure, amounted to P26.8 billion. This has kept the price of the country’s staple grain elevated despite the arrival of some imported rice and the improvement in the rice stocks of the National Food Authority. The declaration of a state of calamity we have proposed in these regions through the President’s Proclamation No. 593, series of 2018, should provide some needed relief.

On a positive note, non-food inflation moderated to 4.0 percent in September from 4.1 percent in the preceding month. Inflation in the National Capital Region (NCR) also showed signs of easing, slowing down to 6.3 percent in September 2018 from the 7.0 percent in August 2018.

These clear signs of easing boost our confidence that inflation will taper off by year-end and go back to our target range by early next year. But we must couple this optimism with quick and focused actions in order to sustain gains made so far in keeping inflation in check.

Global fuel prices remain a concern in the near term given the gloomy outlook on oil supply and an increasing demand for petroleum products during the winter. Thus, we urge a quick response to address this upside risk, including demand-side management strategies. One of the proposed measures is to reduce the country’s overall energy demand through the Department of Energy’s (DoE) e-Power Mo program, the Public Utility Vehicles modernization program of the Department of Transportation, and other renewable energy initiatives.

Moreover, many public utility drivers will benefit from DoE’s continued and expanding partnership with various oil companies to provide fuel discounts. This is apart from a plan by the DoE and the Department of Trade and Industry (DTI) to grant fuel subsidies to canned sardines and other food manufacturers that are also reliant on fuel products.

We also reiterate our call for the speedy passage of the bill amending Republic Act No. 8178 or the Agricultural Tariffication Act, which will significantly bring down the price of rice and improve the competitiveness of the rice sector in the long-term.

We also see the need to restructure the National Food Authority to address its conflicting mandates. We thank the House of Representatives for approving this measure in its third and final reading. We now urge our fellow public servants in the Senate to accelerate its passage. This is among the medium to long-term reforms to address inflation, besides the immediate to short-term measures we have proposed through the Administrative Order No. 13, series of 2018, issued by the President.

The Economic Team also calls on the public to stay on guard against profiteers and report those who unscrupulously take advantage of the current situation. The DTI has intensified its price monitoring activities to ensure compliance among traders.

Despite risks and uncertainties in the global economy, the Philippines’ macroeconomic fundamentals remain robust and resilient enough to weather external shocks. And our work for the people never ends: We continue to stay on course in realizing our medium- and long-term development goals for the country.