MANILA – Uptick in food prices pushed inflation to 4.9 percent in July 2014 but still settled within the high-end target of the government, according to the National Economic and Development Authority (NEDA).
“Rice prices remained at high levels in July 2014 as supply tightness continued to persist in the market,” said Economic Planning Secretary Arsenio M. Balisacan.
Rice prices increased year-on-year by 14.4 percent in July 2014, higher than the 13.6 percent in June 2014, while corn prices rose by 7.8 percent in the same period compared with the 7.6 percent registered in June 2014.
Despite the rise, the month’s inflation rate is still within the Development Budget Coordination Committee (DBCC)’s inflation target of 3.0 to 5.0 percent for 2014.
Balisacan added that the tightness in rice supply which drives up rice prices is expected to come to an end soon as supply has already been augmented by rice imports.
He also noted the Monetary Board’s recent move of hiking interest rates by 25 basis points to 3.75 percent for the overnight borrowing or reverse repurchase facility and 5.75 percent for the overnight lending or repurchase facility.
“Such policy action by the Bangko Sentral ng Pilipinas (BSP) is expected to put a brake on potential price pressures,” said Balisacan.
“The monetary authorities’ move to hike the policy rate was also in accordance with the BSP’s appreciation of the external environment, particularly monetary policy in advanced economies,” he added.
Meanwhile, Balisacan reiterated the importance of securing the needed policies in place that are supportive of a manageable inflation rate.
“Given the potential upside pressures linked to possible increases in food and oil prices and pending petitions for adjustments in utility rates, short term interventions may focus on ensuring supply adequacy by allowing sufficient levels of imports to augment local production of rice and other key commodities,” he said.
Balisacan also noted the government’s efforts to speed up the implementation of programs intended to increase the productivity of agriculture and the food processing industries.
Balisacan said increasing agricultural productivity is needed to ensure adequate local supply of food, bring down prices, and increase farmers’ incomes.