Inflation eased at 4.6% in October —PSA

The average prices of basic goods and services saw a deceleration in October amid slower increase in food prices during the month, the Philippine Statistics Authority (PSA) reported on Friday.

At a virtual press briefing, PSA chief and National Statistician Claire Dennis Mapa announced that inflation — or the rate of increase in commodity prices — clocked in at 4.6% last month, settling at the lower bound of the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 4.5% to 5.3%.

October’s inflation print is slower than September’s 4.8%.

Last month’s figures also brought the year-to-date average at 4.5%, still above the government’s target ceiling of 2% to 4%.

In a statement, BSP Governor Benjamin Diokno said inflation is expected to average above the 2% to 4% goal this year “but is projected to ease close to the midpoint of the target range in 2022 and 2023.”

“Ang dahilan ng pagbagal ng antas ng inflation nitong Oktubre 2021 ay ang mas mabagal na paggalaw ng presyo ng Food and Non-Alcoholic Beverages na may 5.3% inflation at 89.0% share sa pagbaba ng pangkalahatang inflation sa bansa,” Mapa said.

“Ito ay dahil sa mas mabagal na pagtaas ng presyo ng karne, gaya ng manok, na may inflation na 11.9% mula sa 15.6% noong Setyembre 2021; gulay, tulad ng sibuyas, na may 11.4% inflation mula 16.2% noong Setyembre; at isda, partikular ang tilapia, na may inflation na 9.5% mula sa 10.2% inflation,” he added.

(The reason for the eased inflation this October 2021 is slow increase in the prices of Food and Non-Alcoholic Beverages with 5.3% inflation and 89.0% share in the decrease in overall inflation of the country. This is due to a slower increase in the prices of meat, which has inflation of 11.9% from 15.6% in September 2021; vegetables, with 11.4% from 16.2%; and fish, particularly tilapia, with 9.5% from 10.2% inflation.)

In terms of contribution to the overall inflation print in October, Food and Non-Alcoholic Beverages is the main contributor with a share of 45.2%.

The second major commodity group-contributor to the overall inflation is the Housing, Water, Electricity, Gas and Other Fuels, with 4.4% rate and 21.6% share to the total.

“Ang mga malalaki ang kontribusyon sa inflation ng Housing, Water, Electricity, Gas, and Other Fuels ay ang electricity na may 9.2% inflation, LPG na may 26.3% inflation, at renta sa bahay na may 1.5% inflation,” Mapa said.

(The major contributors to the inflation of Housing, Water, Electricity, Gas, and Other Fuels were electricity with 9.2% inflation, LPG with 26.3% inflation, and house rentals with 1.5% inflation.)

Fuel inflation

The third top commodity group to the overall inflation is Transport with 7.1% rate and 12.7% share to the total.

Mapa said the three major contributors to the higher inflation print in the Transport index were petroleum and other fuels with 32.9% inflation from 21.3% in September, followed by tricycle fare with 2.7% inflation and domestic airfare with 6.2% inflation.

Domestic fuel pump prices have been increasing for several weeks in September and October due to supply constraints in the global crude oil market.

The latest data available from the Department of Energy (DOE) indicate that year-to-date adjustments stand at a net increase of P20.80 per liter for gasoline, P18.45 per liter for diesel, and P16.04 per liter for kerosene as of October 26, 2021.

To mitigate the impact of higher fuel prices on the public transport sector, the government provides cash grants amounting to P1 billion for some 178,000 eligible drivers for the remainder of the year. 

The Inter-Agency Task Force has also approved the increase of passenger capacity for public utility vehicles (PUVs) in Metro Manila and adjacent provinces from 50% to 70%, starting November 4, amid the declining number of COVID-19 cases.

The increase in transport capacity will enable drivers to earn more income while making it easier for people to travel, according to the National Economic and Development Authority.

Despite the increase in fuel prices, Mapa said this was balanced by the lower food index, which weighs on the overall inflation.

However, he said the PSA would be tracking the effect of petroleum prices on other commodity groups moving forward.

“The recent grant of fuel subsidies, amounting to P1 billion, to affected public utility vehicle operators, as well as the increased allowable ridership, can help support the transport sector and help prevent second-round effects amid rising oil prices,” Diokno said in a statement.

Inflation in Metro Manila, outside NCR

Following the national trend, inflation in Metro Manila - the country’s economic center - also slowed down to 3.2% in October from 3.5% in September.

The slower inflation in the National Capital Region (NCR), similar to the national trend, was mainly due to lower annual rate of increase in food and non-alcoholic beverages index at 3.4% during the month, from 5.2% in the previous month.

Meanwhile, inflation for areas outside NCR (AONCR) also saw a deceleration to 5% from 5.2% month-on-month due to slower increases in Alcoholic Beverages and Tobacco, Health, Education, and Restaurant and Miscellaneous Goods and Services.

Eight regions in AONCR exhibited lower inflation during the month. Among the regions in AONCR, the lowest inflation was still recorded in Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) at 2.4%, while the highest remained in Region V (Bicol Region) at 6.6%.

Inflation for bottom 30%

Inflation rate felt by the bottom 30% income households also eased to 4.8% in October from 5% in September.

The deceleration was mainly driven by the slower annual rate observed in the heavily-weighted food and non-alcoholic beverages index at 5.1%  during the month.

Also, annual increases slowed down in the indices of the following commodity groups during the month:

• Alcoholic beverages and tobacco, 9.7%
• Clothing and footwear, 2.5%
• Furnishing, household equipment and routine maintenance of the house and recreation and culture, 1.8%
• Education, 0.9%

Moving forward, BSP’s Diokno said the balance of risks to the inflation outlook remains on the upside for the remaining months of 2022, but continues to be broadly balanced for 2022 and 2023.

“The BSP remains of the view that supply-side price pressures are best addressed by timely non-monetary interventions that could ease domestic supply constraints. In this regard, the national government is currently pursuing direct measures to enhance the availability of key goods, such as pork, rice and fish,” the central bank chief said.

To recall, in a bid to help further bring down pork prices to pre-African swine fever levels, the Department of Agriculture issued Memorandum Circular No. 23, Series of 2021 on October 25.

The circular addresses the low utilization of the pork minimum access volume (MAV) plus by allowing the distribution of imported pork to areas outside the NCR Plus.

“One of the government’s highest priorities amid the mobility restrictions is to ensure stable access to affordable food. The temporary importation of pork has worked in the National Capital Region. We need to leverage this momentum to allow unhampered supply to the wet markets and to all the regions,” said Socioeconomic Planning Secretary Karl Kendrick Chua.

As for the rising fuel prices, Chua said that many countries, particularly net oil importers such as the Philippines, feel the impact of the increasing world oil prices.

“We will continue monitoring the global developments so we can urgently respond to the impact of elevated oil prices on ordinary Filipinos, especially our PUV drivers,” the NEDA chief said.  —KBK, GMA News