The Philippine Statistics Authority announced today that the country’s headline inflation rate has gone up to 4.2 percent in January 2021. This is the fastest inflation rate rise in two years and is a real warning sign to the Philippines government.
The original National Economic and Development Authority inflation target for 2021 was 2 to 4 percent and remains so. The faster than predicted inflation figure in January 2021 was mainly driven by the increase in food prices, particularly meat and vegetables.
Agriculture increased production nationwide increased by 0.5% in 2020 so the increase in current price increases, that have particularly been seen in Manila, are a large part of this growing problem.
Cambodia saw large jumps in inflation in 2011/2012 due to the world economic climate and then they managed to turn things around over a 4 year period. High inflation is really bad news for the people as the Philippines starts to see the light at the end of the tunnel for Covid-19.
Food inflation accelerated to 6.6 percent, while non-food inflation remained unchanged from the previous month at 2.3 percent. Meanwhile, faster price adjustments were also recorded in restaurants, miscellaneous goods and services, and transport.
Rising food inflation can be partly be attributed to the outbreaks of African Swine Fever, additional logistics and transportation costs of sourcing pork, the closed fishing season across several regions, and the damage in the countryside from typhoons and floods last year.
Karl Kendrick T. Chua, Acting Socioeconomic Planning Secretary, said, “Our priority right now is to ensure that food supply is adequate so that households affected by COVID-19 and the quarantines will not be doubly affected by the increase in food prices.”
In the interim, allowing more importation of key agricultural products, while adhering to strict safety protocols to prevent entry of contaminated products, will help augment supply and manage inflation.
The Committee on Tariff and Related Matters has endorsed the proposed increase in the amount of pork that can be imported at a lower import tax tariff, and the temporary decrease in the most favored nation tariff rates of pork and rice, subject to the proper process and investigation by the Tariff Commission. All these can increase the food supply and stabilize food prices.
The Department of Agriculture is implementing a four-pronged approach to increase swine supply through heightened swine production in the identified ASF-free areas. The National Economic and Development Authority supports the Department of Agriculture’s proposal to increase the MAV allocation for pork imports and implement ‘special hog lanes’ or food highways in coordination with the Department of Interior and Local Government. These measures will help boost domestic supply and ensure the unhampered delivery of agricultural products across the country.
The Philippine Government as also updated their Development Plan for 2017-2022. The plan now details more in-depth strategies to increase connectivity through infrastructure development and opening up the logistics sector to ensure access to staple goods.
Karl Kendrick Chua, NEDA chief said, “We passed the Rice Tariffication Law to address the rice shortage and related price hikes last 2018. As a result, rice prices decreased by around 10 pesos per kilo from its peak. In January, rice inflation was close to zero at only 0.1 percent. Just like before, the government continues to be proactive in addressing spikes in inflation as this affects the poor the most.”