The Department of Finance (DOF) believes improved productivity in the agriculture sector and stable energy supply will help tame inflation that pushed past expectations and hit a 14-year high of 8.7 percent in January from only 8.1 percent in December.
“The thrust to improve productivity in the agriculture sector and ensure energy security will help stabilize inflation moving forward,” Finance Secretary Benjamin Diokno said.
The Marcos administration is adopting a whole-of-government approach and is continuing the distribution of organic and bio-fertilizers, quality seeds, seedlings, farm production and post-harvest machinery and equipment.
Financial assistance has also been extended through credit and direct cash aid to help reduce the input cost of production and increase the production of farmers.
As an intermediate measure, the government enacted Executive Order (EO) 10, which extended the temporarily reduced Most Favored Nation (MFN) tariff rates of meat of swine (fresh, chilled, or frozen), maize (corn), and rice until end 2023, and coal beyond 2023, provided there will be a semestral review of the reduced tariff rates after the indicated period.
“The thrust to improve productivity in the agriculture sector and ensure energy security will help stabilize inflation moving forward.”
Finance Secretary Benjamin Diokno
With the recent adoption of the Philippine Development Plan (PDP) 2023-2028, the government will begin enforcing medium- and long-term plans to increase productivity and modernize the agriculture sector.
The government has intensified measures to improve local production and agricultural productivity as inflation pushed past the roof in January due to supply constraints and higher utility rates.
Core inflation, which excludes selected volatile food and energy items, went up to 7.4 percent in January from 6.9 percent in December and 1.8 percent in the same month in 2021, depicting underlying demand-side price pressures.
Food and electricity, gas, and other fuels were the highest contributors to the January inflation. Main contributors to increased food inflation were vegetables at 1.06 percentage point (ppt); meat, fish, and sugar each at 0.4 ppt; as well as dairy products and eggs at 0.3 ppt.
Meanwhile, electricity rates increased for the third straight month in January due to higher generation charges and the impact of the completion of a distribution-related refund, while housing rentals rose due to higher contract renewal rates and strong economic recovery.
This year, the Development Budget Coordination Committee (DBCC) assumes an inflation rate ranging from 2.5 to 4.5 percent as it is expected to moderate within target in the last quarter this year as government measures take effect.
Inflation accelerated to 5.8 percent last year and exceeded the two to four percent target range of the Bangko Sentral ng Pilipinas (BSP) from 3.9 percent in 2021.
