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Consumer price hikes dropped sharply to 2.1 percent in February, marking the lowest rate in five months, according to the Philippine Statistics Authority (PSA).
Data from the PSA on Wednesday, March 5, revealed headline inflation slowed significantly from the 2.9 percent rate in January. It clocked in at 1.9 percent in September of last year.
February's lower rate brought average inflation for the first two months to 2.5 percent, falling comfortably within the government’s target of two percent to four percent. In February of last year, the inflation rate was higher at 3.4 percent.
The PSA attributed this decline in overall inflation to the slower price increase of food and non-alcoholic beverages, which eased to 2.6 percent from 3.8 percent in January.
This was also driven by lower price increases in housing, utilities, and fuel, which rose by 1.6 percent in February compared to 2.2 percent in the previous month. Also, the transport sector saw a slight annual decline, reversing the modest increase in January.
Core inflation—excluding food and energy items with volatile prices—declined to 2.4 percent from 2.6 percent in January.
Inflation rates in Metro Manila and regions outside it also slowed at a massive rate, averaging 2.5 percent for the first two months of 2024.
Notably, rice prices saw a steeper decline, continuously deflating from -2.3 percent to -4.9 percent. Rice prices started decreasing in July last year due to the easing of international prices and the slash in rice tariffs.
Vegetable inflation slowed to 7.1 percent in February from 21.1 percent in January, helping to offset the faster rise in meat prices, which climbed to 8.8 percent from 6.4 percent.
Eased burden for poor households
Inflation for the poorest households likewise declined to 1.5 percent in February, down from 2.4 percent in January—even lower than the headline inflation rate. This fell way below the government target.
According to Deputy National Statistician Divina Gracia L. Del Prado, this is the lowest inflation rate for the bottom 30 percent households in four years or since December 2019 when it stood at 1.3 percent.
Del Prado explained that the notable inflation drop in poor households was due to decline in food inflation. Food inflation for this group dropped to 0.8 percent in February from 2.3 percent in the previous month.
“Food has a higher weight in their expenses—51 percent compared to just 35 percent for all-income households. This means that more than half of the poor households’ expenditures go to food,” Del Prado said during a press briefing.
Deflation in rice, which makes up 18 percent of the poor households’ total spending—twice the share for all-income households (nine percent)—had a significant impact on their inflation, as rice accounts for a larger portion of their expenses, she said.
Del Prado added that this explains why inflation for this group was lower compared to that of the all-income households. “The difference is mainly due to the higher weight of food and rice in the bottom 30 percent’s expenses.”
Finance Secretary Ralph G. Recto called this “a major win for lower-income households as it provides much-needed relief, especially on food items.”
‘Effective’ inflation measures
“The downward trend in headline inflation indicates that our efforts to combat inflationary pressures are working,” said Arsenio Balisacan, national socioeconomic planner, which Recto also said.
“However, we will not be complacent in addressing causes of commodity price increases, particularly for food, to help uplift the lives of poor and vulnerable Filipino families, especially,” Balisacan added.
Given the continued inflation slowdown, National Economic and Development Authority (NEDA) vowed to “continue its proactive efforts to ensure adequate food supplies in the short term while steadily raising agricultural productivity.”
Balisacan assured that the government “will sustain its efforts to keep inflation low and manageable to protect the purchasing power of Filipinos.”
“Despite the slowdown in inflation, the government remains committed to mitigating price pressures and ensuring long-term price stability through a whole-of-government approach,” Recto also said.
