Inflation soars to fresh high
5.7% rate fastest in 5 years; rising cost of food, alcoholic beverages, electricity, water cited
The country’s inflation accelerated to a fresh high of 5.7 percent in July, its highest level in five-years – from 5.2 percent in June and 2.4 percent in the same period last year. The Philippine Statistics Authority (PSA) cited the sustained rise in the rate of increase in consumer prices amid skyrocketing commodity and transport costs.
The July inflation was at the upper end of the Bangko Sentral ng Pilipinas’ (BSP) forecast of 5.1 percent to 5.8 percent and marked the fifth straight month that the rate breached the central bank’s target for this year.
The July figure brought the country’s year-to-date inflation at 4.5 percent, exceeding this year’s target of 2.0 percent to 4.0 percent set by the Duterte administration’s economic managers.
The main drivers of the increase were food and non-alcoholic beverages, which posted an inflation rate of 7.1 percent in July. In particular, the average rice prices rose by 5.0 percent year-on-year.
In July, faster inflation was recorded in nine out of 11 commodity groups – with transportation at 8.9 percent, while housing, water, electricity, gas, and other fuels rising by 8.2 percent, the PSE report showed.
Prices on alcoholic beverages and tobacco, meanwhile, jumped 21.9 percent.
To taper the rapid rise in consumer prices, the Department of Finance, Department of Budget and Management as well as the National Economic and Development Authority said that “stronger government measures” are needed to control inflation.
“In the short term, a strategic trade policy is needed to address supply constraints that have further pushed consumer prices up,” the economic team said in a joint statement released Tuesday.
“The current price pressures emanate mainly from supply-side factors. Addressing supply constraints to curb inflation is the utmost priority of the government,” it added.
The economic team is composed of Finance Secretary Carlos G. Dominguez III, Budget Secretary Benjamin E. Diokno and Socioeconomic Planning Secretary Ernesto M. Pernia said.
In July, inflation in the National Capital Region was recorded at 6.5 percent, while 5.5 percent in areas outside Metro Manila.
The economic team also said that reforms in the agriculture will help control inflation, citing the country’s rice stock declined last month by 8.2 percent, which tightened the local supply resulting in costlier retail prices.
The National Food Authority’s rice buffer also remained “almost depleted” during the month, they noted.
“Part of the supply problem is the country’s declining rice stock inventory – causing by weather disturbances in the country and in other rice-producing countries like Thailand and Vietnam – which is taking a toll on the prices of rice,” the economic managers said.
The economic team reiterated their position that amending Republic Act No. 8178 or the Agricultural Tariffication Act to replace quantitative restrictions on rice imports with tariffs will significantly improve rice market, bringing down the price of the grain.
“This reform in agriculture all also provide P10 billion enhancement fund for rice farmers that will help them better access to technology and thereby, ramp up their production,” the team said.
Dominguez, Diokno and Pernia also called on concerned government agencies like the Department of Trade and Industry, and the Department of Agriculture for stricter price monitoring to ensure that no unscrupulous individuals are manipulating the prices of goods.