June 6th, 2021
The slowdown in inflation is a positive development for our economic recovery, but there are still key issues that we need to address.
First, the 4.1% inflation rate is still very slightly above the 2-4% target band of the Bangko Sentral ng Pilipinas. Elevated inflation during a difficult time narrows our options when it comes to interest rate adjustments. We cannot afford any sudden contractionary interest rate increases at the moment, as it would constrict growth prospects during this period of recovery. We must remain vigilant with inflationary pressures.
Second, inflation for key food items is still high, especially for meat. Meat inflation has decelerated to 17.2% from 22.3%. This is still above what many poor families can afford. Fortunately, the African swine fever (ASF) is beginning to retreat here and in our sources of meat imports. Nonetheless, the Department of Agriculture must sustain its efforts to prevent any further spread of the disease among farms and backyard hog raising facilities.
Third, transport inflation, while declining, is still at elevated levels. Furthermore, the sudden suspension of free bus rides in Metro Manila is certain to make its dent on the July transport inflation. As a supply augmenting move, as well as a matter of basic moral duty, the P4.6 billion in unpaid obligations incurred by the government in contracting transport service providers under Bayanihan 2 should be paid as soon as possible.
Tricycle fare remains high at 20.4%, even as it is a basic transport service among many poor, rural communities. We must begin to consider loosening restrictions on tricycle rides among family members, particularly as it is a well-ventilated transport option.
Petroleum and fuels inflation decelerated from 35.1% to 22.6%. Still, we must be prepared for price hikes in fuel as global demand for fuel begins to recover.
The Bicol region has the highest inflation rate outside of NCR. Although the inflation rate has decelerated from 7.5% to 6.3%, this remains far too high for our constituents. Outside of NCR, corn prices have increased, from an inflation of 5.6% to 5.9% this month. As corn is a key ingredient to feeds for livestock, we expect this to continue to impact meat prices. Fish prices have also increased outside of NCR, from 7.9% inflation last month to 8.6%.
We appeal to the Department of Trade and Industry and to the Department of Interior and Local Government to ensure that there are no unnecessary hindrances to the free flow of goods to Bicol. As you know, overland trips to Bicol could face bottlenecks as there is no other overland way to Bicol than through CALABARZON.
We also appeal to the DILG and the NTF to rationalize policies on transport, particularly on tricycles, which is a key mode of travel in Bicol, and a key driver of inflation.
Moving forward, we must ensure that there is adequate food supply, especially as the rainy season comes, which may affect food production.