Food inflation moderates in May
IMPACT OF PORK TARIFF REDUCTION AND MAV INCREASE TO BE SEEN IN JUNE 2021 – NEDA
June 4, 2021
The temporary reduction in tariffs and the increase in the minimum access volume (MAV) for pork, implemented in mid-May, is expected to bring in benefits starting June 2021, said the National Economic and Development Authority (NEDA).
The Philippine Statistics Authority reported today that headline inflation rate remained steady for the third straight month at 4.5 percent in May 2021, with year-to-date inflation at 4.4 percent.
While this is above the full year target of 2 to 4 percent for 2021, the Bangko Sentral ng Pilipinas expects full-year inflation to fall back within the target range at 3.9 percent. In addition, the Rice Tariffication Law continues to help keep rice prices lower and stable, making the overall inflation more manageable.
Meat inflation remained the main driver of overall inflation with a 1.4-percentage points (ppt) contribution, similar to the previous month. However, month-on-month meat inflation registered its first decline in the past eight months with a -0.1 percent inflation rate, suggesting stabilizing meat prices.
“We expect to gradually see the benefits of Executive Orders (EO) 133 and 134 in the coming months to help curb pork prices and provide relief to consumers and households. As we reopen our economy, we will continue to work to keep other drivers of inflation stable to ensure Filipinos recovering their jobs and income will not see their income eroded by higher prices,” Socioeconomic Planning Secretary Karl Kendrick T. Chua said.
Moreover, the inflation rate in May remained stable as inflation for food and non-alcoholic beverages moderated to 4.6 percent. Food inflation slowed down to 4.9 percent, with rice inflation further decelerating to -0.8 percent from -0.3 percent in the previous month. Vegetables and fruits also recorded deflation. Meanwhile, inflation in transport services decelerated to 15.4 percent from 17.6 percent in April.
“Ensuring access to affordable and nutritious food and enabling the mobility of our workers are important for our economic recovery. With the vaccination of the A4 priority group of workers underway, we expect to see more workers able to seek employment or perform their jobs outside of their homes. Bringing them safely to their places of work will complement our efforts to reopen the economy,” the NEDA chief said.
President Duterte has also issued EO 135 to temporarily reduce the Most Favored Nation tariff rates on imported rice to 35 percent from the previous 40 to 50 percent. This was a proactive move to diversify market sources and augment rice supply amid the increasing global rice prices in order to minimize future rice inflation pressures.
Furthermore, the President’s declaration of a one-year state of calamity in view of the African Swine Fever (ASF) also allows LGUs to access their calamity fund and realign resources to help the local hog industry. The government will support domestic production through hog repopulation programs and the effective conduct of ASF vaccine trials. It will also fast-track the deployment of financial assistance to affected producers and the implementation of ASF contingency plans.
“In managing inflation, our priority is to improve our domestic production and provide needed support to our farmers and producers. When necessary, we will augment supply with importation to keep prices stable and guarantee food security. This balancing act will help us better manage the impact of inflation on the people,” Chua said.