THE national government will extend targeted subsidies to specific sectors of the economy that are affected by the “elevated” inflationary pressures, the Department of Finance said on Tuesday, as official inflation data showed the January print accelerating to 8.7 percent, the highest since 2008.
Finance Secretary Benjamin E. Diokno made the disclosure on subsidies after the Philippine Statistics Authority (PSA) reported that the country’s inflation rate in January had beaten both government and market expectations.
“The government ensures that its fiscal policy avoids adding up to aggregate demand that risks further inflation by maintaining fiscal responsibility,” Diokno said.
“[The government] will continue to provide targeted subsidies to affected sectors to cushion the impact of elevated inflationary pressures,” Diokno added.
In a separate interview, Diokno said the government will design a program that will provide “multi-targeted” subsidies to sectors that contribute to overall inflationary pressures.
“We will see where it will go. Gasoline is not anymore [a concern]. It is really on food,” he told reporters in an interview on the sidelines of a Bureau of Internal Revenue (BIR) event in Pasay City on Tuesday.
Diokno said the national government remains committed to intensifying local food production and improving agricultural productivity.
The national government, he added, is continuously distributing organic and bio-N fertilizers, quality seeds, seedlings, farm production and post-harvest machinery and equipment to farmers.
“The thrust to improve productivity in the agriculture sector and ensure energy security will help stabilize inflation moving forward,” he noted.
Imee: Transport still a concern
Saying transport remains a concern though a notch lower than food as an inflation driver, Senator Imee Marcos floated the idea of reviving her proposal to suspend value-added tax (VAT) on petrol products.
“It is important to look closely into the inflation headline of 8.7 percent. Although it has eased, transport leads at 11.2 percent,” Marcos noted, when sought for a reaction to the PSA report.
“Perhaps it is time to study my proposed suspension, not of excise taxes but of VAT, for one year, ‘when an emergency arises’ on petrol products?” the senator said in an SMS to the BusinessMirror.
“Food remains high. 10.7 percent, with sugar and onions, garlic, other tubers, vegetable plantations topping price increases. Can I say anything more re: hoarding, smuggling, and other criminal manipulations?” she added.
Meanwhile, she asked whether, as “utilities were tolled at 8.5 percent, pushed by authorized water increases that kicked in January 2023,” it might be good to consider the question of whether it makes sense to set a “lifeline rate for water, for the smallest consumers, as we have for electricity?”
Within first quarter
Diokno said he expects inflation to decelerate within the first quarter of the year, citing the stabilization of Philippine peso against the US dollar and falling oil prices.
Finance Undersecretary Zeno Ronald R. Abenoja said the DOF is now working with the Department of Agriculture, Department of Trade and Industry, the National Economic and Development Authority in crafting the targeted subsidies program.
“We are working with line agencies DA, DTI, NEDA to look at the sources of inflation pressures and then initiate targeted measures toward these sources,” Abenoja told reporters.
“The sources of inflation vary, but the vulnerable sectors remain the same,” he added.
Abenoja said the impact of the lowering of tariff rates on certain food items as well as the monetary policy on addressing inflation will be felt in the next few months.
Image credits: Voltaire F. Domingo/Senate PRIB