August inflation hits 6.4%

Increase in prices highest in 9 years, surpasses BSP forecast

The rate of increase in consumer prices, or inflation rate, climbed last month to its highest level in 9 years after the costs of food items accelerated during the monsoon season, data from the Philippine Statistics Authority (PSA) showed Wednesday.

The country’s inflation zoomed to 6.4 percent on-year in August, the highest since March, 2009 and marked its sixth consecutive

month that the actual rate surpassed the Bangko Sentral ng Pilipinas’ (BSP) forecast.

Likewise, the August figure was faster than the 5.7 percent in the previous month and the 2.6 percent in the previous year.

It was also much higher than the 5.85.9 percent that the BSP and markets expected.

Food inflation up to 8.5% Price adjustments on food and non-alcoholic beverages were the main reasons for the spike in inflation, which jumped to 8.5 percent from 2.9 percent a year ago. The August food inflation was also higher than the 7.1 percent in July.

Non-food inflation rate, meanwhile, was at 4.1 percent, slightly decelerating from the previous month’s 4.2 percent, but was almost twice the rate during the same period last year at 2.3 percent.

The marginal deceleration in the price indices of housing, water, electricity, gas, and other fuels; and communication, as well as the drop in the price index of education, partially offset the increase in headline inflation.

DA should act – NEDA

Following the release of the inflation report, Socioeconomic Planning Secretary Ernesto M. Pernia said that a committed effort from agencies in the agriculture sector to boost output and introduce policy reform is needed to bring down prices of farm products.

“The government, particularly the Department of Agriculture, must act quickly and fervently with a sound judgment to ease the increasing prices of agricultural commodities which are the main drivers of inflation,” Pernia said.

“While the government’s economic team expected inflation to peak in the third quarter before tapering off towards the latter part of the year, inflation in August is largely beyond the median market forecast. That is why we remain steadfast in putting forward measures that will address prices, especially for food,” he added.

Damage to agriculture brought about by southwest monsoon and Typhoon Karding in Ilocos, Cagayan, and Cordillera regions amounted to P33.5 million, thus taking a toll on the prices of agricultural commodities.

“The rehabilitation of the disasterstricken agriculture areas must be highly prioritized,” Pernia said.

On rice production, palay production growth slowed down to 1.68 percent from 12.06 percent during the first half of 2017. Rice stocks down to 1.9-M MT Also, the country’s total rice stocks inventory of the National Food Authority (NFA) further declined to 1.9 million metric tons (MT) as of August 10, 2018. This was around 15 percent lower than the levels in the previous month.

“The NFA should fast-track the distribution of remaining inventories, alongside the completion of the government’s 250 thousand MT rice imports from Thailand and Vietnam in the last week of August to build its rice inventory, a necessary step to temper inflation,” Pernia said.

He also cited the weak performance of the fisheries sector with output of fisheries and other crops falling by 2.14 percent and 0.44 percent in the first half of 2018. This was mainly caused by reduced trips of fishermen, fish kill, and destruction of fish cages, aside from weather disturbances.

“A comprehensive and strategic trade policy in place is more important now than ever. Importation of agricultural products to boost supply at the domestic level must be coordinated and harmonized with the local stock inventory and production,” Pernia said.

He reiterated the passage of the amendments to Republic Act 8178 or the Agricultural Tariffication Act, which is a crucial step in reforming the agriculture sector over the medium and long term.

This proposed bill, once signed into law and fully implemented, is expected to help bring down the prices of rice and provide farmers better access to farming technologies and high-yielding variety crops.

In the fisheries sector, Pernia said good quality fingerlings in the aquaculture should be utilized, especially for milkfish (bangus) following reports of high mortality rates of fingerlings.

This should be coupled with tighter monitoring of the closed fishing season in the Visayas to allow fish to spawn and replenish its population.

He added there is also a need to review, and possibly amend, the Fisheries Code and other policies governing the sector.

Price ceiling pushed

In light of the worsening inflation level in the country, consumer group Laban Konsyumer, Inc. has reiterated its push for the imposition of mandated price ceiling.

LKI president Victorio Mario Dimagiba said imposition of price ceiling is provided for under sections 7 and 8 of the Price Act on selected basic goods like rice, sugar , chicken, milk fish, canned goods, milk, bread, flour, cement, steel bars among others.

Dimagiba also urged the Department of Trade and Industry to be tough on profiteers and horders.

“Catch and charge profiteering and hoarding and cartel being committed at any stage of the supply chain from producer to disposer to consolidator to middle men to wholesaler to retailer to vendor and talipapa,” he said.

Finally, the former DTI Undersecretary in charge of the consumer welfare group, said there is a need to designate a Price action officer who will be the coordinator and overseer of a road map on inflation and prices.