The Department of Finance (DOF) wants a whole-of-government approach to tackle inflation that remained elevated in February despite the central bank’s very aggressive monetary policy stance.
During the Presidential Communications Office briefing on Tuesday, March 7, Finance Secretary Benjamin E. Diokno said that he recommended to President Marcos the creation of an Inter-agency Committee on Inflation and Market Outlook (IAC-IMO).
Diokno said IAC-IMO will serve as an advisory body on measures to mitigate inflation and ensure food and energy security while balancing the interests of producers, consumers, and the economy.
"I emphasize that in order to tackle inflation, [we must undertake an] all-of-government approach,” Diokno told reporters after he briefed President Marcos about the DOF’s comprehensive report on measures to mitigate inflation.
Diokno said the Bangko Sentral ng Pilipinas has already done its part, noting that the country’s monetary authorities are the most aggressive in the region.
From January 2022 to the most recent Monetary Board policy meeting, the BSP implemented 400 basis point hikes while it was only 250 basis points for India, 225 basis points for Indonesia and only 100 basis points for Thailand and Malaysia.
"The pressure now is on the fiscal side. We need to focus on commodity prices,” Diokno said.
“We told the President what are the short term measures and long term measures. We talked about production, importation of goods with supply deficits, post-harvest, warehousing, and then distribution and transport of goods,” he added.
To address energy security, the Department of Energy is actively pursuing measures to ensure affordable and reliable energy supply through the timely completion of major transmission projects and energy conservation promotion efforts for households.
Another round of P1,000 cash aid is also being prepared for some 9.3 million poor households under the extended Targeted Cash Transfer (TCT) program.
“We will continue to work with Congress to legislate priority bills for the agriculture sector. These bills include the New Agrarian Emancipation Act, the National Land Use Act, Livestock Development and Competitiveness Bill, and the Amendments to the Philippine Crop Insurance Charter,” Diokno added.
In February, inflation rate slightly eased to 8.6 percent from the 8.7 percent recorded in January due to the lower contribution of transportation cost as a result of a decrease in petroleum prices.
February’s inflation print was within the BSP’s February forecast of 8.5 percent to 9.3 percent.
Seasonally adjusted month-on-month (MoM) inflation also decreased to 0.3 percent in February from January’s rate of 1.0 percent.
Core inflation, which excludes selected volatile food and energy items, however, climbed to 7.8 percent from 7.4 percent in January and 1.9 percent in the same period in 2022, depicting underlying demand-side price pressures.
Food and electricity, gas, and other fuels remain the highest contributors to inflation, contributing 3.86 percentage points (ppt) and 1.04 ppt, respectively.
Vegetables (0.92 ppt), fish (0.56 ppt), meat (0.42 ppt), and sugar (0.39 ppt) were the main contributors to high food inflation, while utilities (1.04 ppts), food and beverage serving services (0.69 ppt), and actual rentals for housing (0.66 ppt) were the top contributors to non-food inflation.
All regions exceeded the target inflation in February 2023, with Region VI (Western Visayas) exhibiting the highest inflation rate of 10.8 percent, followed by Region XI (Davao Region) and Region IX (Zamboanga Peninsula) both at 9.9 percent.
Inflation in Metro Manila also slightly increased from 8.6 percent in January to 8.7 percent in February this year.
Inflation for the bottom 30 percent of households, which has been rebased to 2018, remained unchanged at 9.7 percent.
Food and non-alcoholic beverages remains the highest driver of inflation in the group, as it rose by 10.3 percent equivalent to 58.6 percent share to the group’s overall inflation rate.
Housing, water, electricity, gas, and other fuels also inched up to 12.2 percent, which is 19.6 percent share of the group’s inflation rate.