Inflation in December decelerated to 3.9 percent, its slowest pace since February 2022, but economic managers remain on their toes, with risks posed by El Nino weather event on prices agricultural commodities, particularly rice.
The National Economic and Development Authority said Friday the government is continuously monitoring prices and inflation risks and implementing measures to protect the purchasing power of Filipino households.
Even with the lower inflation rate in December, the full-year average still stood at 6 percent, way above the Bangko Sentral ng Pilipinas’ target range of 2 percent to 4 percent.
Inflation for most commodity groups either slowed down or stabilized during the month. Rice inflation, however, rose to 19.6 percent from 15.8 percent in November 2023. It was also the most significant contributor to the December inflation with 1.7 percentage points, followed by food and beverages services and housing rentals with 0.5 ppt each.
This price movement on rice, NEDA Secretary Arsenio Balisacan said, underscored the decision of the government to extend the lower tariff rates on key agricultural commodities like pork, corn, and rice to ensure sufficient food supply for Filipinos and prevent price spikes of the commodities.
“Amid an uptrend in international rice prices and the expected negative impact of the El Niño phenomenon, the Interagency Committee on Inflation and Market Outlook will closely monitor the situation and propose further temporary tariff adjustments if necessary. We will also push for trade facilitation measures to reduce other non-tariff barriers. While our medium-term objective to boost agricultural productivity remains, it is important to augment domestic supply to ease inflationary pressures on consumers, particularly those in low-income households,” he said.
The government has formed an interagency task force to implement courses of action to mitigate the impact of the prolonged dry spell that could be spawned by El Nino in the first half of the year, particularly on food production.
“We must remain vigilant in monitoring the prices of our commodities and continue to implement strategies to address short-term and long-term inflation-related challenges,” Balisacan said.
Inflation in December came at the lower end of the BSP forecast range of 3.6 to 4.4 percent.
Even so, the BSP said it will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making.
It has maintained a target range of 2 percent to 4 percent for inflation this year.
A surge inflation has forced the BSP to adopt an aggressive monetary policy tightening stance that has lifted its benchmark overnight rates to 6.5 percent last year from 2 percent in early 2022.
