The Philippine Statistics Authority (PSA) reported that inflation in the Philippines eased to 3.9 percent in December, continuing a downward trend that began two months prior. This rate was lower than November’s 4.1 percent and significantly below the 8.1 percent recorded in the previous year. It fell within the range of 3.6 to 4.4 percent set by the Bangko Sentral ng Pilipinas (BSP) and was even lower than the median of 4.0 percent predicted by economists in a Manila Times poll. In fact, it was the slowest rate of inflation since February 2022.
According to the PSA, the decrease in overall inflation in December 2023 can be attributed to the lower year-on-year growth in the index of housing, water, electricity, gas, and other fuels. This index only grew by 1.5 percent in December, compared to 2.5 percent in the previous month. Food and alcoholic beverages accounted for slightly over half of the overall inflation, contributing 53 percent or 2.1 percentage points.
The PSA attributed the decline in food inflation to a 9.2-percent decrease in the prices of vegetables, tubers, plantains, cooking bananas, and pulses. As a result, food inflation fell from 5.8 percent in November to 5.5 percent in December. Core inflation, which excludes volatile food and energy items, also decreased further to 4.4 percent from 4.7 percent in November and 6.9 percent from the previous year.
Despite the decline in inflation, the overall inflation rate remained high at 6 percent, surpassing the BSP’s target range of 2 to 4 percent. Core inflation averaged 6.6 percent. The National Economic and Development Authority (NEDA) noted that inflation rates for most commodity groups either decelerated or remained stable in December.
Rice inflation, however, experienced a surge, rising to 19.6 percent in December from 15.8 percent in November. This increase played a significant role in driving overall inflation for the month, contributing 1.7 percentage points. Food and beverage services, as well as housing rentals, also made notable contributions of 0.5 percentage points each.
Socioeconomic Planning Secretary Arsenio Balisacan emphasized the importance of Executive Order 50, which extends reduced tariff rates for essential agricultural commodities such as pork, corn, and rice. He stated that the Interagency Committee on Inflation and Market Outlook would closely monitor the situation and propose further temporary tariff adjustments if necessary. Balisacan also highlighted the need for trade facilitation measures to reduce non-tariff barriers and increase domestic supply to alleviate inflationary pressures on consumers, particularly those in low-income households.
In response to the downtrend in inflation, President Ferdinand Marcos Jr. assured the public that his administration would continue working diligently to maintain affordable commodity prices throughout the year. Additionally, Albay 2nd District Rep. Jose Maria Clemente Salceda called on the government to focus on rice production and importation to stabilize prices. Salceda’s projections aligned with the figure, stating that inflation would fall below the BSP’s target range of 2 to 4 percent by the end of the year, with an annual average inflation rate of 6 percent. He noted that while rice inflation rose to 19.6 percent, other commodity prices remained under control. For example, the 12.2 percent inflation rate for fruits and nuts could be attributed to seasonal consumption during the Christmas season, while the increase in water supply prices is subject to regulation. All other commodity prices either remained in the single digits or experienced negative growth.
Overall, the easing of inflation in the Philippines provides much-needed relief for consumers and offers hope for a more stable economic environment. The government’s efforts to address inflation through measures such as reduced tariff rates and increased domestic supply demonstrate a commitment to ensuring affordable prices for the population.
Source: The Manila Times