PBBM Admin Claims It Has Conquered Inflation Spike

The Marcos, Jr. administration successfully tackled one of its major challenges in 2023—high inflation-linked partly to disrupted global markets causing supply chain bottlenecks—through strategic measures focused on mitigating the impact on vulnerable populations.

With the Medium-Term Fiscal Framework (MTFF) in place, the government’s fiscal consolidation path aligns monetary and fiscal policies to contain inflation pressures. I Photo: Bongbong Marcos Facebook

From a peak of 8.7 percent in January 2023, inflation decelerated to 4.1 percent in November 2023, well within the Bangko Sentral ng Pilipinas (BSP)’s forecast range of 4.0 to 4.8 percent for the same month.

This brings the year-to-date (YTD) inflation rate to 6.2 percent, in line with the Development Budget Coordination Committee (DBCC)’s assumption of 6.0 percent for the full year 2023.

“The slower inflation for November is a testament to the Marcos, Jr. administration’s whole-of-government effort to moderate rising commodity prices while protecting the most vulnerable sectors from its effects,” said Finance Secretary Benjamin E. Diokno in an earlier statement.

The Inter-agency Committee on Inflation and Market Outlook (IAC-IMO) was established in May by Executive Order (EO) No. 28 as a proactive measure to combat inflation. Co-chaired by the Secretaries of the Department of Finance (DOF) and the National Economic and Development Authority (NEDA), IAC-IMO advises the Economic Development Group (EDG) on measures to keep inflation, especially on food and energy, within the government’s target range.

To regulate food inflation, President Ferdinand R. Marcos, Jr. issued EO 39 in September, imposing a temporary price cap on rice, addressing non-competitive practices, and discouraging hoarding.

In December 2022, EO 10 extended reduced Most Favored Nation (MFN) tariff rates on rice, corn, and pork, further extended under EO 50 on December 22, 2023, to mitigate the impact of the ongoing strong El Niño on domestic food prices.

The government redoubled efforts on warehouse investigations, forfeiture procedures, and charges against market players for anti-competitive practices. In terms of rice importation, the government worked on an agreement with India, and the IAC-IMO streamlined guidelines and processes for importation.

For non-food inflation, the government implemented demand and supply management measures, monitored wage and fare hike petitions, and suspended pass-through fees for delivery trucks under EO 41.

To alleviate inflationary pressures on vulnerable sectors, the administration distributed financial assistance through various programs such as the Targeted Cash Transfer (TCT) Program, Pantawid Pasada Program, and fuel subsidy program.

The International Monetary Fund (IMF) commended this targeted strategy over generalized subsidies. Recently, the President issued EO 44, establishing the “Walang Gutom 2027: Food Stamp Program” to provide monetary-based assistance to low-income households.

With the Medium-Term Fiscal Framework (MTFF) in place, the government’s fiscal consolidation path aligns monetary and fiscal policies to contain inflation pressures. The BSP raised its policy rate successively by 425 basis points since May 2022 until it reached 6.25 percent in March.

Subsequently, the Monetary Board kept rates unchanged for four straight meetings until September.

In October, the BSP delivered an off-cycle 25 bps rate hike, bringing the policy rate to 6.50 percent to re-anchor inflation expectations. The DBCC anticipates the inflation rate returning to the target range of 2.0 to 4.0 percent from 2024 until 2028.

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