Farm productivity programs to soften inflation — DOF

MANILA, Philippines — The implementation of programs to improve the productivity of local farmers is expected to ease food prices and temper inflation this year, according to the Department of Finance (DOF).

In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the productivity enhancement programs implemented by the Department of Agriculture (DA) are expected to help subdue increases in food prices this year.

“Productivity programs for agriculture will ease seasonal food price increases in the future. The DA has set up programs to modernize agriculture, build farm-to-market roads, develop value chains and enhance research and development,” Beltran said.

In order for the full-year inflation rate to settle within the government’s target range of two to four percent, Beltran said month-on-month price change in 2020 should be at most 0.3 percent per month.

The country’s headline inflation accelerated at 2.5 percent last December, beating the 1.3 percent rate recorded in November 2019. However, this was still lower compared to the December 2018 inflation rate of 5.1 percent.

This brought the country’s annual average inflation to 2.5 percent for 2019, slower than the 5.2 percent recorded in the previous year, and well within the government’s target range of two to four percent.

On a month-on-month basis, Beltran said the price level of goods and services accelerated by nearly 0.7 percent in December 2019, mainly due to higher prices of fish and vegetables.

“Boosted by holiday demand, fish prices surged month-on-month by five percent and vegetables, 3.7 percent,” he said.

However, Beltran said inflation in December was still slower compared to the same period in 2018, mainly due to lower rice prices.

“The continued easing of rice prices tempered the effects of the surge in fish and vegetable prices, moderating food inflation to 2.1 percent,” Beltran said. 

He said non-food inflation rose 2.4 percent, boosted by the upsurge in health costs (3.5 percent), restaurants (3.3 percent) and household furnishings (3.2 percent).

“This was dampened by lower electricity and fuel prices (0.8 percent),” Beltran said.