Diokno: Marcos admin to ensure inflation will be target-consistent over the medium term
Finance Secretary Benjamin Diokno emphasized that addressing inflation remains the top priority of the Marcos administration, as headline inflation for October 2022 rose to 7.7 percent from the previous month’s 6.9 percent. The year-to-date average inflation stood at 5.4 percent.
“Addressing high inflation is the number one priority of the economic team. Although inflation is expected to remain elevated for the rest of the year with the impact of severe tropical storm Paeng on food supply and persistent global supply chain issues, the government will help ensure that inflation will be on a target-consistent path over the medium term with the implementation of direct measures to address supply shocks,” said Secretary Diokno.
Transport fare hikes, higher domestic fuel pump prices, and increased food and commodity prices amid recent typhoons to be the main drivers of the elevated inflation rate for the month.
The accelerated increase in food and non-alcoholic beverages at 9.4 percent from 7.4 percent in September 2022 was determined to be the top source of inflation in October 2022.
“Demand-side dynamics have also partly placed upward pressure on inflation following increased economic activity,” said Secretary Diokno.
According to Department of Finance estimates on the contribution to inflation by commodity group, electricity, gas, and other fuels had the highest contribution to inflation at 1.1 percentage points. Meanwhile, main contributors to the higher food inflation are meat (0.7 ppt), fish (0.5 ppt), and sugar (0.4 ppt). Operation of personal transport equipment and passenger transport services contributed 0.6 ppt and 0.5 ppt, respectively.
Secretary Diokno assured the public that the government is implementing measures to address supply shocks and bottlenecks.
These measures include improving local production, ensuring the timely importation of key commodities including fertilizers and raw materials, improving distribution efficiency, and ensuring energy security.
To help address food and energy inflation until the end of the year, the economic team is working for the extension of Executive Order No. 171, which reduced the Most Favored Nation (MFN) rates on pork, rice, corn, and coal. The Tariff Commission will conduct a public hearing on November 9, 2022 to gather position papers from various stakeholders.
The government has implemented a series of targeted support programs to allay the immediate effects of rising food insecurity on vulnerable sectors. Existing subsidy programs include fuel subsidies for transport workers, fuel discounts for farmers and fisherfolk, and social pension for indigent senior citizens.