AS PROJECTED, the inflation rate accelerated further in July, reaching a new five-year high of 5.7 percent, the Philippine Statistics Authority (PSA) reported Tuesday, August 7.
The PSA said the uptrend, from 5.2 percent in June 2018 and 2.4 percent in June 2017, was mainly due to the higher prices of food and non-alcoholic beverages.
The food index alone registered an annual inflation rate of 6.8 percent. Nine out of 11 commodity groups under the food basket registered higher annual increases in July.
The government's economic team, in a joint statement issued shortly after PSA released the July inflation rate, traced the uptick to supply constraints that have further pushed consumer prices up.
“The current price pressures emanate mainly from supply-side factors. Addressing supply constraints to curb inflation is the utmost priority of the government,” the joint statement read.
The team - composed of the Department of Budget and Management, Department of Finance, and National Economic and Development Authority - urged stronger government measures, "most especially in improving agriculture productivity."
The team also called for a strategic trade policy in the short term to address the supply constraints.
The team noted, meanwhile, that while the overall price level picked up, the month-on-month inflation eased to 0.5 percent in July, from 0.6 percent in the previous month.
The July inflation rate still falls within the Bangko Sentral ng Pilipinas (BSP) forecast range of 5.1 percent to 5.8 percent.
Government earlier projected that inflation will taper off towards the end of 2018.
“Part of the supply problem is the country’s declining rice stock inventory — caused by weather disturbances in the country and in other rice-producing countries like Thailand and Vietnam — which is taking a toll on the prices of rice,” the economic team said.
Rice stocks of 2.36 million metric tons (MT) in July 2018 declined by 8.2 percent year-on-year, from 2.57 million MT in July 2017, and fell 18.8 percent from the preceding month’s 2.91 million MT.
The National Food Authority’s rice buffer is almost depleted, the team said.
They reiterated their position that amending Republic Act No. 8178 or the Agricultural Tariffication Act to replace quantitative restrictions on rice imports with tariffs will significantly improve the rice market, bringing down the price of the grain.
“This reform in agriculture will also provide a P10-billion enhancement fund for rice farmers that will help them have better access to technology and, thereby, ramp up their production,” they said. (SunStar Philippines with PR)