August inflation jumps to 4.9%

·3 min read

THE country’s headline inflation rate has increased to 4.9 percent in August 2021 from four percent in July 2021.

This is at the upper end of the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 4.1 to 4.9 percent for August 2021, the Philippine Statistics Authority said Tuesday, Sept. 7, 2021.

Despite this increase, the year-to-date inflation remained at 4.4 percent.

“The latest outturn is consistent with the BSP’s assessment that inflation could settle close to the high end of the target range in the near term before decelerating back to within the target range by yearend,” said BSP Gov. Benjamin Diokno in a tweet. “In 2022 to 2023, inflation will likely fall towards the midpoint of the target, supported by the continued and timely implementation of non-monetary measures and reforms to address directly supply-side pressures on key food items.”

The BSP chief noted that “the risks to the inflation outlook remain broadly balanced over the policy horizon. The uptick in international commodity prices due to supply-chain bottlenecks and the recovery in global demand could lend upside pressures on inflation.”

He also warned that “the emergence of new coronavirus variants, leading to stricter lockdown measures and delayed reopening of the economy, is seen to pose downside risks to both aggregate demand and inflation.”

Food, meat inflation

Food inflation continued its uptrend at 6.9 percent in August from 5.1 percent in July. In particular, fish inflation accelerated to 12.4 percent from 9.3 percent, while vegetable inflation rose to 15.7 percent from 5.0 percent due to the impact of the southwest monsoon and onset of the rainy season.

Meat inflation slightly increased to 16.4 percent in August from 16 percent in July.

However, on a month-on-month basis, meat inflation slowed down to 0.4 percent, suggesting some price stabilization. In particular, retail prices of frozen and fresh pork have fallen by around P19 to 38 per kilo from their peak, following the issuance of Executive Orders 133 and 134. Rice inflation also remained negative at 0.4 percent year-on-year, following the issuance of Executive Order 135.

“We are beginning to see the impact of our proactive interventions to ease food prices, especially pork and rice. The government will continue to adjust and strengthen its policies to ensure that the people have access to affordable food amid the pandemic,” said Socioeconomic Planning Secretary Karl Kendrick Chua in a statement.

Interventions

Chua said the Department of Agriculture (DA) is intensifying its hog repopulation program to address the supply gap in domestic production and address the elevated pork inflation.

Meanwhile, to ensure stable fish supply, the DA issued Administrative Order 22, approving a Certificate of Necessity to Import (CNI) fish of 60,000 metric tons up to Dec. 31. The DA is also preparing to increase the CNI should the initial imports not be sufficient to curb fish inflation. This is part of the government’s proactive monitoring to ensure sufficient supply and stable prices during the closed fishing season.

To support vegetable production, the government will further promote urban agriculture and backyard gardening. Under these initiatives, the government will provide raw material resources, machinery and equipment, training and technical assistance, resiliency projects and funding support.

Chua added that as granular lockdowns are implemented to curb the spread of Covid-19 due to the Delta variant, “we should keep enabling key sectors of the economy to operate and ensure essential goods and services reach consumers.”

“Keeping transportation available and affordable, while still following minimum public health standards, will help facilitate the movement of people, goods and services. All these will allow people to safely earn income and keep prices stable,” he said. (KOC with PR)

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