Inflation quickens in September to 6.1 percent despite rice price cap

Benise Balaoing, ABS-CBN News

Posted at Oct 05 2023 09:13 AM | Updated as of Oct 05 2023 05:17 PM

MANILA - Inflation quickened again in September as food prices rose, the state statistics bureau said Thursday.

Despite the government imposing a price cap on rice, the consumer price index climbed to 6.1 percent in September, faster than the 5.3 percent in August, according to the Philippine Statistics Authority. 

Inflation quickens in September to 6.1 percent

Meanwhile, inflation for the bottom 30 percent of households reached 6.9 percent in September, higher than national figures.

Inflation quickens in September to 6.1 percent
Inflation quickens in September to 6.1 percent
Inflation quickens in September to 6.1 percent

Average inflation for the lower socio-economic strata from January to September reached 7.3 percent, the PSA noted.

The PSA noted that rice inflation grew by 17.9 percent despite a price cap on regular and well-milled rice being implemented from September 5 to October 4. 

National Statistician and PSA Undersecretary Dennis Mapa noted that food prices rose by 9.7 percent year-on-year in September, against the 8.1 percent inflation in August.

Food inflation at the national level rose to 10 percent in September from 8.2 percent in August, the statistics agency noted. 

Mapa said compliance with the rice price cap seemed to be mixed nationwide.

He noted that government personnel checked for compliance with the rice price cap twice: one within the first 15 days of its implementation, and another within the next 15 days.

"Nung first phase nung ating data collection, may mga outlets na nagsasabi na inuubos nila yung stocks dito sa regular and well-milled kaya nagkakaroon ng mas mataas na presyo doon sa karamihan, sa P41 for the regular-milled and P45 for the well-milled."

"Nung second phase doon nagkaroon ng adjustment, mas marami yung nasasabi nating compliant," he said.

(During the first phase of our data collection, some outlets said they were finishing off their stocks of regular and well-milled rice, so the prices were above the 41 and P45 ceilings respectively. During the second phase, more were compliant.)

Mapa noted that out of the 2,601 varieties of the regular milled rice they surveyed, only 640 fell within the mandated price ceiling of P41. Out of the 3,498 varieties of well-milled rice, meanwhile, only 687 or about 20 percent were within the P45 price cap.

Mapa said the average price of regular milled rice in September was P47.50, higher than August's P43.30. Well-milled rice prices also increased to P52.70 from P47.63 the month before.

Special prices also went up to P61.10 in September, up from P56.30 in August.

Also contributing to the higher prices of goods was transport, which saw a 1.2 percent inflation rate. 

Inflation quickens in September to 6.1 percent

"Ang dahilan ng pagbilis ng antas inflation ng transport ay ang mas mabagal na pagbaba ng presyo ng mga gasolina, na may -2.4 percent inflation; at diesel, na may -12.7 percent inflation," Mapa said. 

(Transportation inflation increased because of slower price decreases in gasoline and diesel.)

Oil prices only started dropping on September 26, after 11 weeks of hikes.

The official said the P1 provisional jeepney fare increase will have an impact on fare prices.

"May direct effect yun sa transport, kasi meron tayong weight kung saan is yun ang fare sa mga jeep, medyo mataas yung weight noon, about 3.5 percent. Tapos of course may mga indirect effect yun sa ibang commodities na gumagamit ng transport," he explained. 

Meanwhile, core inflation, which strips out volatile food and energy items, further eased to 5.9 percent in September 2023 from 6.1 percent in August 2023, the PSA said. 

September's headline inflation rate was within the Bangko Sentral's forecast of 5.3 to 6.1 percent.

The inflation rate in September brought the average for the year to 6.6 percent. 

In June, economic managers revised their inflation forecast for 2023 to between 5 and 6 percent, which was lower than the 5 to 7 percent assumption they gave in April.

Inflation remains the most urgent concern of Filipinos, according to a survey by Pulse Asia Research Inc.

The study further showed that Filipinos’ disapproval of the government’s handling of inflation had risen by 19 percentage points. 

The approval ratings of President Ferdinand Marcos Jr. and Vice President Sara Duterte fell in the third quarter of 2023, according to Pulse Asia. 

The National Economic and Development Authority (NEDA) said it is committed to helping the neediest Filipinos as inflation spikes.

NEDA Secretary Arsenio Balisacan said the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) is proactively monitoring the demand-and-supply situation of key commodities so they can adjust policies accordingly.

The IAC-IMO also recommended the recommended extending the lower Most Favored Nation (MFN) tariff rate on rice under Executive Order (EO) No. 10. 

"This policy response must be complemented by efforts to improve the predictability and transparency of issuing the Sanitary and Phytosanitary Import Clearance for rice and all commodities,” said Balisacan.

The economist added that should the global price of rice continue to rise due to the impacts of El Niño and rice export bans among key rice-exporting countries the proposal to temporarily lower tariffs on rice--regardless of origin--may be revisited.

“As we implement short-term measures to ease the negative effects of inflation, it is imperative that we also address our long-term food supply issues by providing support for our local farmers to boost their productivity and resilience," he said.

"These include investing in irrigation, modern high-yielding varieties, pest control, and logistics,” he added.

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ING Bank senior economist Nicholas Mapa said September's inflation figures show that the Bangko Sentral ng Pilipinas (BSP)' rate hikes are "largely ineffective" against cost-push inflation. 

The central bank kept interest rates steady at 6.25 percent during its September policy-setting meeting, but Governor Eli Remolona has hinted at a possible rate hike in November.

"You can hike to…6 and three quarters, you can hike to 7 percent but unless you address the underlying issues of supply-side bottlenecks, or the lack in supply, you’re not gonna be able to fight off inflation," he said. 

"We’re using the wrong tool."

"I mean I’d liken this to a patient taking antibacterial medication for a viral disease. You don’t address the problem per se, so you never get a solution," he explained.

"We really need to get back to basics, and address the underlying issues: address cost-side inflation with cost-side measures," he stressed. 

The BSP said inflation is likewise expected to remain elevated in the coming months due to the impact of supply shocks on food prices and the rise in global oil prices. 

"Nonetheless, inflation is still projected to decelerate back to within the inflation target by end-2023 in the absence of further supply shocks," the BSP said in a statement.

The central bank noted, however, that the El Niño, transport fare adjustments, higher-than-expected wage hikes, higher electricity rates, and higher prices of goods due to supply constraints may keep inflation up till 2025. 

For its part, the Palace said the government has initiated a series of measures, including a digital Food Stamp Program, fuel subsidies, and targeted assistance for farmers, to help address inflation. 

"The President and his cabinet are actively working to alleviate transportation costs and make long-term investments in irrigation and modern farming practices to support our agricultural community," the Presidential Communications Office said. 

- With a report from Lady Vicencio, ABS-CBN News