The government's chief economic manager said the Marcos administration's inflation assumption for the year is still feasible despite the rise in consumer prices last month.

In a statement, Finance Secretary Benjamin E. Diokno said the government is determined to minimize the impact of inflation and support consumers, retailers, and farmers.

For this reason, Diokno said the Development Budget Coordination Committee’s (DBCC) inflation outlook of five percent to six percent remains doable this year.

Inflation in August surged to 5.3 percent from the previous month's 4.7 percent. Consequently, the average rate for the first eight months reached 6.6 percent, surpassing the DBCC's assumption for the full year 2023.

“While we are seeing a slight uptick, our inflation rate assumption of 5 to 6 percent for full-year 2023 remains doable,” Diokno said on Tuesday, Sept. 5.

The DBCC is an inter-agency body tasked to set the government’s macroeconomic assumptions.

The primary drivers of the August headline inflation were food and non-alcoholic beverages, accounting for 3.1 percentage points (ppt) out of the total 5.3 percent.

Additionally, restaurants and accommodation services contributed 0.7 ppt, while Housing, water, electricity, gas, and other fuels contributed 0.5 ppt.

Food inflation also posted a notable increase from 6.3 percent in the previous month to 8.2 percent. In comparison to August of the previous year, it also rose from 6.5 percent.

Among the food commodities, rice and vegetables made significant contributions to the headline inflation, primarily due to the impact of recent typhoons during the Habagat season.

“To manage upward pressures in the price of rice, the imposition of price control on rice through Executive Order No. 39 serves as a short-term measure against non-competitive practices by market players,” Diokno said.

"Price controls, when carefully calibrated and closely implemented, are effective in the near term,” he added.

The government will implement measures to address the concerns of rice retailers and farmers while ensuring an ample supply of rice at lower prices and fostering increased competition within the rice industry, Diokno said.

Non-food inflation has primarily been driven by higher housing rentals, food and beverage serving services, and passenger transport services, attributed to recent oil price increases resulting from ongoing Organization of the Petroleum Exporting Countries supply cuts.

To assist vulnerable sectors, the government will prioritize the completion of targeted cash transfer (TCT) and fuel subsidy programs for qualified public utility vehicle (PUV) drivers and operators.

Additionally, the government will expedite the implementation of a fuel discount program for the agriculture and fisheries sector, benefiting over 312,000 farmers and fisherfolk.

The Inter-agency Committee on Inflation and Market Outlook (IAC-IMO) will continue to monitor food and non-food inflation closely.

It will also oversee the effective implementation of EO 39, a short-term measure aimed at addressing inflation.