February 05, 2021
The Philippine Statistics Authority reported today that the country’s headline inflation rate accelerated to 4.2 percent in January 2021, from 3.5 percent in the previous month. This is the fastest inflation rate in two years since the 4.4 percent inflation recorded in January 2019. Despite the higher inflation rate in January, the National Economic and Development Authority (NEDA) said that the inflation target for this year remains unchanged at 2 to 4 percent.
The faster inflation in January 2021 was mainly driven by the increase in the price indices for food items, particularly meat and vegetables. Food inflation accelerated to 6.6 percent, while non-food inflation remained unchanged from the previous month at 2.3 percent. Meanwhile, faster price adjustments were also recorded in restaurants, miscellaneous goods and services, and transport.
Rising food inflation can be attributed to the outbreaks of African Swine Fever (ASF), additional logistics and transportation costs of sourcing pork to augment supplies throughout the country, the closed fishing season across several regions, and the damage in the countryside from typhoons and floods last year.
“Our priority right now is to ensure that food supply is adequate so that households affected by COVID-19 and the quarantines will not be doubly affected by the increase in food prices,” said Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua.
In the interim, allowing more importation of key agricultural products, while adhering to strict safety protocols to prevent entry of contaminated products, will help augment supply and manage inflation.
The Committee on Tariff and Related Matters has endorsed the proposed increase in the minimum access volume (MAV) of pork and the temporary decrease in the most favored nation (MFN) tariff rates of pork and rice, subject to the proper process and investigation by the Tariff Commission. All these can increase the food supply and stabilize food prices.
The Department of Agriculture is implementing a four-pronged approach to increase swine supply through heightened swine production in the identified ASF-free areas. In particular, NEDA supports the Department of Agriculture’s proposal to increase the MAV allocation for pork imports and implement ‘special hog lanes’ or food highways in coordination with the Department of Interior and Local Government. These measures will help boost domestic supply and ensure the unhampered delivery of agricultural products across the country.
The Updated Philippine Development Plan 2017-2022 launched yesterday also details strategies to increase connectivity through infrastructure development and opening up the logistics sector to ensure access to staple goods.
Nevertheless, overall inflation remains manageable as we continue to reap the benefits of the Rice Tariffication Law.
“We passed the Rice Tariffication Law to address the rice shortage and related price hikes last 2018. As a result, rice prices decreased by around 10 pesos per kilo from its peak. In January, rice inflation was close to zero at only 0.1 percent. Just like before, the government continues to be proactive in addressing spikes in inflation as this affects the poor the most,” the NEDA chief affirmed.