Inflation eased to 2.3% in September

Credit to Author: Anna Leah E. Gonzales| Date: Tue, 06 Oct 2020 16:40:39 +0000

A rice and vegetable vendor stands near his stall at the New Sampaloc Market on the corner of Bustillos and Legarda streets in Sampaloc, Manila, on Oct. 6, 2020. The Philippine Statistics Authority announced on Tuesday that the country’s headline inflation eased to 2.3 percent in September from 2.4 percent in August. (Photo by Enrique Agcaoili)

The country’s headline inflation slowed to 2.3 percent last month on the back of lower prices of food and non-alcoholic beverages, the Philippine Statistics Authorty (PSA) reported on Tuesday.

Data from the statistics agency showed that the latest figure was slower than August’s 2.4 percent, but faster than the year-earlier’s 0.9 percent. It was also slower than the 2.4-percent average estimated by economists in a Manila Times poll.

Year-to-date, consumer price growth settled at 2.5 percent, well within the government’s 2.0- to 4.0- percent target.

In a briefing, National Statistician Claire Dennis Mapa attributed the deceleration to “the slowdown in the inflation for food and non-alcoholic beverages (from 1.8 percent in July to 1.5 percent).”

“This was due to the downtrend in the prices of eggplant and garlic; meat particularly chicken and pork; and milk, cheese and eggs,” he explained.

Slower inflation was also recorded for alcoholic beverages and tobacco at 12.9 percent; clothing and footwear, 1.8 percent; and furnishing, household equipment and routine maintenance of the house, 3.7 percent; and recreation and culture, -0.5 percent.

Faster inflation was registered for housing, water, electricity, gas and other fuels at 1.2 percent; transport, 8.3 percent; communication, 0.4 percent; and education, 0.9 percent.

Inflation in the National Capital Region (NCR) remained at 2.9 percent for the third straight month in September. A year earlier, the rate was 0.9 percent. Consumer price growth outside Metro Manila eased to 2.4 percent from 2.5 percent in July.

Inflation for poor households picked up to 2.8 percent from 2.7 percent in August and 0.2 percent a year earlier.

Mapa blamed the acceleration on the 16.3-percent annual increase in the transport index last month. The indices of housing, water, electricity, gas and other fuels, and of education, also accelerated to 2.1 percent and 0.8 percent, respectively.

Despite this, the PSA official said headline inflation was projected at 2.4 or 2.5 percent for the rest of the year.

More room for BSP

Responding to the latest inflation data, analysts say this would give the Bangko Sentral ng Pilipinas (BSP) more room to maintain its current monetary policy settings.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the data “could be enough, as seen recently, to sustain the policy rate at the record low level of 2.25 percent, which still helps stimulate greater demand for loans, investments and other business/economic activities.”

ANZ Research analysts expect consumer price growth to remain muted as the favorable base effect fades and economic activities continue to be subdued. They said the latest figure aligned with their 2020 inflation projection of 2.5 percent.

ING Bank Manila senior economist Nicholas Antonio Mapa said his bank “[does] not expect [the] BSP (Bangko Sentral ng Pilipinas) to resort to additional rate cuts for the balance of the year as Diokno waits to gauge the impact of his recent flurry of rate cuts carried out earlier in the year.” |

He estimates average inflation to settle at 2.4 percent this year and help preserve Filipinos consumers’ purchasing power, given the economic recession caused by the coronavirus pandemic.

Meanwhile, the central bank said the latest data was “consistent with the BSP’s prevailing assessment that inflation is expected to remain benign over the policy horizon with the balance of risks tilting toward the downside due largely to the impact on domestic and global economic activity of possible deeper economic disruptions caused by the pandemic.” WITH A REPORT FROM MAYVELIN U. CARABALLO