Inflation drops to 2.8%, but rice prices rose by 22.6% in January

Consumer prices in January dipped to their slowest pace in over three years, but the Bangko Sentral ng Pilipinas (BSP) warned inflation could temporarily accelerate in the second quarter due to El Niño weather conditions.

Rice inflation, however, soared to 22.6 percent last month from 19.6 percent in December 2023 – a 14-year high since the March 2009 record of 22.9 percent.

The Philippine Statistics Authority said inflation in January dropped to 2.8 percent, down from the 3.9 percent in December last year and 8.7 percent in the same period in 2023.

“This is the lowest recorded since the 2.3 percent inflation rate registered in October 2020,” said the PSA.

The January inflation rate was also within the BSP’s forecast range of 2.8 to 3.6 percent, PSA said.

“This inflation outturn is consistent with the BSP expectations that inflation will likely moderate in Q1 2024 due largely to negative base effects and some easing of supply constraints affecting key commodities,” BSP said.

“However, inflation could temporarily accelerate above the target range from Q2 2024 due to the impacts of El Niño weather conditions and positive base effects,” it added.

The BSP said key upside risks are associated with potential pressures emanating from higher transport charges, increased electricity rates, higher oil prices, and higher food prices due to strong El Niño conditions.

“Meanwhile, the impact of a relatively weak global recovery and the government measures to mitigate the effects of El Niño could ease some price pressures… Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,” it added.

The BSP said it will consider the latest inflation and gross domestic product (GDP) turnouts for the Monetary Board’s policy meeting on Feb. 15.

In a separate statement, NEDA Secretary Arsenio Balisacan said the

Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) will continue to closely monitor the prices of rice and other goods to provide the President and the Cabinet with timely and appropriate policy recommendations and ensure stable and affordable prices of commodities.

With the El Niño lingering until May, Balisacan said: “We introduce stop-gap measures, as necessary, such as allowing further imports on key commodities until our supply stabilizes at prices affordable to consumers while ensuring remunerative prices for local producers.” Earlier, President Marcos issued Executive Order No. 50 extending until the end of 2024 the reduced tariff rates of pork, corn, and rice.

He also reactivated the Task Force El Niño through Executive Order No.

53, which tasks concerned agencies to intensify the government’s efforts to secure sufficient water and food supply, power, health, and public safety nationwide.

Balisacan said the Department of Agriculture would continuously monitor on-the-ground situations and adequately guide the government in addressing food production concerns.

The Philippines also recently signed a Memorandum of Understanding with Vietnam for the continuous supply of at least 1.5 to 2 million metric tons of rice annually.

Moreover, the Department of Social Welfare and Development will expand its National Food Stamp program to cover 300,000 households in 2024, a move that Balisacan said will help the government assist the most vulnerable families during the El Niño season.

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