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As rice deflation continues, inflation hits new low

Government statistics show that prices of rice have been decreasing, pulling down the headline inflation rate which has decelerated to a new low of 1.7% in August 2019.

The Philippine Statistics Authority (PSA) reported on September 5, 2019 that this was the lowest inflation since the 1.8% in October 2016. This brought the year-to-date inflation to 3%.

The PSA traced the deceleration in the annual increase of prices of goods and services to the slower price movements in the heavily-weighted food and non-alcoholic beverages.

This commodity basket registered an inflation rate of only 0.6% in August as food prices weakened.

Among the food commodities, rice registered a deflation for the fourth consecutive month, reaching -5.2 percent in August 2019 from -2.9 percent in July.

“The Rice Liberalization (Tariffication) Act continues to help increase rice supply in the country. This allows more Filipinos to access cheaper rice. This is especially helpful since a large number of families spends almost 30 percent of their total food expenditure on rice,” National Economic and Development Authority (Neda) Undersecretary for Policy and Planning and currently Officer-in-Charge (OIC) Rosemarie G. Edillon said om a statement.

She noted that domestic retail and wholesale price of rice is now lower compared to the price levels in 2018, down by 10% to 13% percent year-on-year or around P4.20 to 5.20/kilo.

This is due to the higher inventory, increasing by 31.9 percent in July 2019, she added.

Rice farmers, however, have been complaining that farmgate prices of palay (unhusked rice) have plunged to as low as P7 per kilo.

Edillon said “there is a need to fast-track the rollout of the programs and projects under the Rice Competitive Enhancement Fund to support the farmers against dropping palay farmgate prices.”

Rice tariffication, which was signed into law six months ago, removes quantitative restrictions on rice imports and imposes tariffs on imported rice in a bid to improve food security in the country.

Meanwhile, the PSA said slower annual inflation rates were also registered by other commodity groups: Housing, water, electricity, gas, and other fuels, 1.8%; Health, 3.1%; Recreation and culture, 1.8%; and Restaurant and miscellaneous goods and services, 3.2%.

The August 2019 inflation outturn, which is much lower than the 2.4% in July 2019, remains consistent with the Bangko Sentral's prevailing assessment of a benign inflation environment over the policy horizon.

The Bangko Sentral ng Pilipinas projected that average inflation will likely stay within the government’s 2% to 4% target range for 2019 to 2021.

The year-to-date inflation of 3% is at the midpoint of the BSP's target range of 3% ± 1.0 percentage point for 2019.

Core inflation, which excludes selected volatile food and energy items to measure underlying price pressures, was also lower at 2.9 percent in August from 3.2 percent in July, the Bangko Sentral noted. (Ventures Cebu)

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