President Marcos’ chief economic manager stated that the substantial rise in consumer prices in July was temporary and is expected to align with the government’s target range in the coming months.

Finance Secretary Ralph G. Recto said in a statement that the 4.4 percent inflation rate recorded last month is “likely a one-time uptick,” as the price of rice, a staple food for Filipinos, remained relatively low in July 2023.

“Pansamantala lamang ang pagtaas ng inflation rate nitong Hulyo dahil sa tinatawag nating base effect sa presyo ng bigas [The increase in the inflation rate in July is only temporary due to what we call the base effect on rice prices],” Recto said on Tuesday, Aug. 6.

“Para masukat ang pagbilis o pagbagal ng pagtaas o pagbaba ng presyo ng mga bilihin, inihahambing po natin ito sa presyo ng mga bilihin noong Hulyo ng nakaraang taon kung saan hindi pa masyadong tumaas ang presyo ng bigas,” he added.

[To measure the acceleration or deceleration of the increase or decrease in the prices of goods, we compare it to the prices of goods in July of the previous year when the price of rice had not increased much yet.]

In July, headline inflation surpassed the government's target range of 2.0 percent to 4.0 percent for the first time this year. Despite this uptick, the average inflation rate for the first seven months remained within the target at 3.7 percent.

The increase was primarily driven by higher inflation rates in both food and non-food items, particularly in liquefied petroleum gas (LPG), fuel, meat, and fruits. Additionally, the slower decline in electricity and fish prices contributed to the overall inflation rise.

Notably, rice inflation decelerated to 20.9 percent in July from 22.5 percent in June, attributed to a month-on-month decrease in the retail prices of milled, well-milled, and special rice, ranging from -0.20 percent to -0.33 percent.

“Inflation rate is expected to stabilize and fall within target for the rest of the year as the impact of government interventions, particularly the reduced rice tariffs, will be more pronounced starting this August,” Recto said.

“Although, we might see slight increases in vegetable prices due to damages brought by Typhoon Carina in the agriculture sector,” he added.

Retail prices of rice at local stores only saw a gradual decrease in July because local traders were still selling their existing stock, which they originally bought at high prices before Executive Order (EO) No. 62 was enforced.

Recto also assured the public that the drop in retail prices of rice will be more noticeable in the upcoming months as the amount of rice imported at lower tariffs is expected to increase and supplement local supply.

In order to ensure food security, the Department of Finance is backing the proposed increase in the Rice Competitiveness Enhancement Fund (RCEF) to enhance the productivity, profitability, and competitiveness of local rice farmers.