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Inflation climbs to 8.7% in Jan. 2023, highest since Nov. 2008 —PSA

Prices of consumer goods and services continued their upward trajectory in the first month of 2023, hitting a fresh record as food prices remained elevated during the period, data released by the Philippine Statistics Authority (PSA) on Tuesday showed.

Inflation, or the rate of increase in the prices of goods and services, clocked in at 8.7% in January 2023, the fastest since the 9.1% recorded in November 2008, said National Statistician and PSA chief Claire Dennis Mapa at a press briefing.

The 8.7% January 2023 inflation rate is higher compared to the 8.1% recorded in December 2022 and 3% recorded in January 2022, he added.

"Ang pangunahing sanhi ng mas mataas na antas ng inflation nitong Enero 2023 kumpara noong Disyembre 2022 ay ang mas mabilis na pagtaas ng presyo ng Housing, Water, Electricity, Gas and Other Fuels," Mapa said.

(The main reason for the higher inflation rate in January 2023 compared to December 2022 was the faster increase in prices of Housing, Water, Electricity, Gas and Other Fuels.)

Electricity and vegetables, particularly onions, were the top contributors to January inflation, each accounting for 1.1 percentage points (ppt), PSA data showed.

Restaurant services and house rentals also accelerated and contributed 0.7 and 0.6 ppt, respectively, while public and private transport contributed a total of 1.0 ppt.

Other key agricultural commodities such as meat and fish contributed a total of 0.8 ppt, while processed food commodities such as sugar and bread and other cereals contributed a total of 0.7 ppt to total inflation.

Expected to go down

In a statement, President Ferdinand Marcos Jr. said the inflation rate is set to go down after the expected lowering of prices of fuel and agricultural products.

“It is unfortunate that we get the news today that inflation has continued to increase up to 8.7%. I supposed it can only be said that the measures that we have taken have not yet gone through the system,” Marcos said in statement.

“As I said, the importation of many of the agricultural products, which have been a large part of the inflation rate... as we have already taken some measures so that the supply will be greater and so that will bring the prices down but that will take a little time. And as my continuing estimate or forecast is that by – we can see the lowering of inflation by the second quarter of this year,”  he added.

The Chief Executive said that with the dip in the prices of fuel and agricultural products, the inflation rate will continue to slide down as he sincerely believes that “this is going to be as high as it's going to get.”

The Bangko Sentral ng Pilipinas (BSP) earlier said inflation was expected to remain elevated in January 2023 due to the higher prices of utilities and commodities.

The central bank had projected the January 2023 inflation to fall within 7.5% to 8.3%.

To address rising inflation, the National Economic and Development Authority (NEDA) said the government will prioritize higher agricultural productivity, food supply augmentation, and energy security.

“As part of the administration’s 8-point agenda and the Philippine Development Plan (PDP) 2023-2028, the government is implementing measures to ease price pressures and cushion the impact of inflation, especially on basic commodities,”  NEDA Secretary Arsenio Balisacan said in a statement.

He said they are working with other agencies for timely and efficient implementation of the strategies and programs under the PDP, particularly for agriculture, agribusiness, and energy security.

The government is looking at short-term measures like augmenting supply such as through temporary easing of import restrictions, price monitoring, and targeted social support, Balisacan added.

For medium- to long-term measures, the government would focus on ensuring food security through higher agricultural productivity and ensuring energy security by pursuing the energy transition and development program, he said.

In a separate statement, Finance Secretary Benjamin Diokno said the current inflation exceeded the BSP’s inflation forecast of 7.5% to 8.3% and the median estimate of private sector economists at 7.6%

“The President (Ferdinand “Bongbong” Marcos Jr.) remains on top of the situation as the administration continues to adopt a whole-of-government approach to tame inflation especially on key food items,” he said.

According to Diokno, the government ensures that its fiscal policy avoids aggregate demand that risks further inflation by maintaining fiscal responsibility.

Targeted subsidies will still be given to affected sectors to cushion the impact of inflation, he added.

“We will intensify our efforts to bring full year inflation within the DBCC’s inflation  assumption of 2.5-4.5 % for 2023,” Diokno said.

“We expect inflation to decelerate in the latter part of 2023. Modernizing and improving agriculture and securing ample and lower energy supply could help stabilize inflation moving forward,’ he added.

In a television interview, Senate Deputy Minority Leader Risa Hontiveros urged Marcos and his economic team to "take the bull by the horns," as the current measures to reduce inflation do not seem to be working.

"Obviously they're not doing enough. Even this 8.7% rate, even the President cannot debate with it. Kasi PSA na mismo ang nag-uulat (The report came from the PSA itself). So [the] government really needs to take the bull by the horns. The President has to, his economic management team has to," she said. 

Economic think tank IBON Foundation, meanwhile, said there were not enough jobs being created despite the growth of the economy.

“Hindi sumasabay yung sinasabing job generation sa paglago ng ekonomiya kaya nung nagmahal ang presyo ng pagkain nabawasan kinukunsumo nila, nauwi sila sa kagutuman at kahirapan,” Sonny Africa, executive director of IBON Foundation, said on "24 Oras."

(Job creation did not keep pace with economic growth. Thus, as food costs rose, people ate less and fell into a state of hunger and poverty.) —with Hana Bordey and Sherylin Untalan/KBK/RSJ/VBL, GMA Integrated News