Inflation eases to 2.4% in August

Credit to Author: Mayvelin U. Caraballo, TMT| Date: Fri, 04 Sep 2020 16:25:36 +0000

Shoppers inspect produce being sold as part of Megaworld Lifestyle Malls’ ‘Harvest to Goodness’ weekend farmers’ market at Uptown Bonifacio mall in Bonifacio Global City, Taguig City, on Sept. 4, 2020. The government announced on Friday that headline inflation eased to 2.4 percent in August on the back of lower prices of food and non-alcoholic drinks. (Photo by Enrique Agcaoili)

The country’s headline inflation slowed to a five-month low of 2.4 percent in August on the back of lower prices of food and non-alcoholic drinks, the Philippine Statistics Authority (PSA) announced on Friday.

The figure, slower than July’s 2.7 percent but faster than 1.7 percent in the same month last year, falls outside the Bangko Sentral ng Pilipinas’ (BSP) 2.5- to 3.3-percent outlook.

The rate matches March’s 2.4 percent and is smaller than the 2.7-percent average estimate in a Manila Times poll of economists.

“The main reason for the lower inflation rate in August is the slower price movement of food and non-alcoholic beverages,” National Statistician Claire Dennis Mapa said in a briefing.

The heavily weighted food and non-alcoholic beverages index decelerated at an annual rate of 1.8 percent last month from 2.4 percent in July.

Prices of fish eased to 2.6 percent from 3.8 percent; meat, 4 percent from 4.9 percent; and vegetables, 0.9 percent.

Year-to-date, consumer price growth averaged 2.5 percent, falling within the central bank’s 2- to 4-percent target range for 2020.

In a statement, the National Economic and Development Authority (NEDA) traced last month’s inflation to the unhampered movement of food and other essential commodities across the country, and to the benefits of the rice tariffication law, ensuring ample supply of the staple.

It said supply-chain efficiency in agriculture must be improved to ensure low and stable inflation amid the ongoing coronavirus disease 2019 pandemic and anticipated typhoons.

“As we continuously implement varying levels of community quarantines and localized lockdowns in the country, we need the government and the private sector to tap local agricultural produce and maximize the use of digital technologies to ensure stability in the supply chain,” Acting Socioeconomic Planning Secretary Karl Kendrick Chua was quoted as saying in the statement.

He also acknowledged the need to effectively manage the supply and allocation of agricultural commodities to ensure enough buffer stock, prevent wastage and spoilage, and minimize the losses of farmers. This includes facilitating the delivery of vegetables and other agricultural commodities to Metro Manila and other regions.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the August figure, despite falling below the central bank’s estimated range for the month, was consistent with the expectation that inflation would remain benign over the policy horizon.

“The balance of risks tilts toward the downside, owing largely to potential disruptions to domestic and global economic activity of the ongoing pandemic,” he added.

Diokno also said the prevailing interest rate environment and ample liquidity in the financial system, reflecting the significant monetary policy easing and liquidity-enhancing measures the Bangko Sentral undertook, were seen to lend sufficient support to economic activity.

“Early signs of recovery in domestic activity are being noted, with further improvements expected as containment measures are relaxed further, and firms and households adjust better to the post pandemic operating environment,” he added.