Food inflation to continue easing – World Bank

Louella Desiderio – The Philippine Star

September 9, 2024 | 12:00am

MANILA, Philippines — Food inflation is likely to continue its downtrend as the reduced tariffs on rice temper price increases, according to the World Bank.

“Food inflation is expected to decline following further reductions in import tariffs implemented in late July and a higher base from August onwards,” the multilateral lender said in its Philippine Monthly Economic Developments report for August 2024 released last Friday.

Headline inflation eased to a seven-month low of 3.3 percent in August from 4.4 percent in July primarily due to slower food price upticks, the Philippine Statistics Authority reported last week.

Inflation for food alone slowed to 4.2 percent in August from 6.7 percent in July.

The easing in food inflation was attributed to the significant slowdown in rice inflation to 14.7 percent in August from 20.9 percent in July, due to the lower tariffs on rice imports.

Executive Order 62, which brought down the tariff on imported rice to 15 percent from 35 percent, took effect last July.

Earlier, National Statistician Dennis Mapa said rice inflation is expected to further go down to single-digit level this month citing base effects.

For the January to August period, overall inflation averaged 3.6 percent, within the government’s target band of two to four percent.

The World Bank also said the Bangko Sentral ng Pilipinas (BSP)’s move to start easing monetary policy last month, along with prospects of aggressive rate cuts by the US Federal Reserve, has buoyed financial market sentiment.

“Recent investor optimism was fueled by the strong Q2 (second quarter) GDP (gross domestic product) outturn and the start of the policy easing cycle by the BSP,” the World Bank said.

Last Aug.15, the BSP reduced the target reverse repurchase rate to 6.25 percent from a 17-year high of 6.5 percent.

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