Daily TribuneThe country’s economic planning secretary said that the Philippines, one of the top importers of rice in the world, may drop tariffs on the grain to help lower domestic expenses in response to the unexpected increase in consumer prices in August
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Rice, transport and electricity were key sources of the August inflation spike. | Graph courtesy of ING Philippines
The Philippine inflation rate accelerated in August due to higher prices of rice and fuel, ending a six-month streak of slowdown and making the central bank reevaluate its decision to pause interest rates.
Preliminary data released by the Philippine Statistics Authority on Tuesday showed that the country's headline inflation reached 5.3 percent in August, surpassing the 4.7 percent rate recorded in July.
The country's headline inflation, also called the consumer price index, is above the 5 percent forecast of economists in a DAILY TRIBUNE poll but within the central bank's 4.8 percent to 5.6 percent projection for the month.
But the country's core inflation, which excludes the volatile energy costs, eased to 6.1 percent in August from the previous month's 6.7 percent.
Core indicator higher
This brings the average core inflation from January to August 2023 to 7.4 percent. Core inflation was observed at 4.6 percent in August 2022.
In a press briefing, National Statistician and PSA Undersecretary Dennis Mapa noted the higher prices of rice, which weigh heavily in the consumer price index.
"The acceleration of food inflation in August 2023 was mainly brought about by the higher year-on-year growth rate observed in rice at 8.7 percent from 4.2 percent in July 2023," Mapa said.
In response to rising retail costs and concerns about merchant stockpiling, President Ferdinand Marcos Jr. has limited the price of the basic commodity.
The Philippines set rice price caps to control food costs, and they would last as long as the government deemed it necessary.
The country's economic planning secretary said that the Philippines, one of the top importers of rice in the world, may drop tariffs on the grain to help lower domestic expenses in response to the unexpected increase in consumer prices in August.
The country's chief economic planner has also called for a review of the existing tariff levels on rice to help lower the cost of this staple for consumers while considering the impact of this intervention on local producers.
"To partially counterbalance the rise in global prices and alleviate the impact on consumers and households, we may implement a temporary and calibrated reduction in tariffs," National Economic and Development Authority Secretary Arsenio Balisacan said in another statement.
Meanwhile, food inflation nationwide increased to 8.2 percent in August 2023 from 6.3 percent in July 2023. Food inflation was lower at 6.5 percent in August 2022.
PSA said transportation prices increased 0.2 percent during the month after declining 4.7 percent annually in July.
For context, the Light Rail Transit Authority raised fares during the month. LRTA increased the single journey ticket minimum fares for both LRT1 and LRT2 to P15 while maximum fares have gone up as high as P35.
In August, oil companies raised diesel prices by almost P10 and gasoline by almost P6.
ING economist Nicholas Mapa said rice, transport and electricity costs will determine the inflation path for the next few months. While he expects the BSP to stay on hold, he said in a post on platform X (formerly Twitter) that it "could consider a hike if this becomes a trend."
Following the data, the Bangko Sentral ng Pilipinas said in a statement it "stands ready to adjust the monetary policy stance as necessary" to prevent the broadening of price pressures and the emergence of additional second-order effects.
