Inflation cools down further to 7.6% in March

Inflation rate further eased in March on the back of slower increase in food, transport, and utility prices during the period, the Philippine Statistics Authority (PSA) reported on Wednesday.

At a virtual press conference, National Statistician and PSA chief Claire Dennis Mapa reported that inflation — the rate of increase in the prices of goods and services — decelerated to 7.6% last month from 8.6% in February, bringing the year-to-date rate to 8.3%.

This is, however, still faster than the 4% print in March 2022.

March’s inflation rate falls within the Bangko Sentral ng Pilipinas’ projection range of 7.4% to 8.2% for the month.

“Ang pangunahing dahilan ng pagbagal ng antas ng inflation nitong Marso 2023 kaysa noong Pebrero 2023 ay ang mas mabagal na paggalaw ng presyo ng Food and Non-Alcoholic Beverages,” Mapa said.

(The main reason for the slowdown in the inflation rate this March 2023 versus February 2023 was the slower movement in the prices of Food and Non-Alcoholic Beverages.)

The commodity group had a 50.5% share in the overall decline in the inflation rate during the period.

Mapa said inflation for Food and Non-Alcoholic Beverages dipped to 9.3% from 10.8% on the back of slower rate increase in vegetables (20% from 33.1%), meat (4.6% from 6.5%), and sugar and other confectionery (35.2% from 37%).

“Ang pangalawang nag-ambag sa pagbagal ng antas ng inflation ay ang mas mabagal na paggalaw ng presyo ng Transport na may 5.3% inflation at 29.8% share sa pagbaba ng pangkalahatang inflation sa bansa nitong Marso 2023,” he said.

(The second contributor to the easing of inflation was the slower movement in the price of Transport which had an inflation of 5.3% and 29.8% share in the overall slowdown in inflation in the country in March 2023.)

The slower Transport inflation resulted from the decline in the price of gasoline with -7.4% inflation from 3.8% in February and diesel with -6% rate from 14.2% in the prior month.

The third commodity group which contributed to the easing of inflation in March was Housing, Water, Electricity, Gas and Other Fuels, with 7.6% inflation (from 8.6%) and 19.1% share in the overall decline.

This was on the back of the reduction in the inflation print in LPG, with -1% rate from 9.1% in the prior month as well as the slowdown in electricity rates at 17.3% rate from 19.5%.

The other commodity groups that contributed to the inflation downtrend in March were Health and Information and Communication, which saw inflation rates of 3.9% and 0.7%, respectively.

In a separate statement, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said that while inflation is beginning to ease, it remains as the most pressing issue that the government monitors and needs to address.

“Protecting the purchasing power of Filipinos, especially the most vulnerable sectors of the economy, is one of the top priorities of the administration, which we have also laid out in the Philippine Development Plan 2023-2028,” Balisacan said.

“We are committed to provide policy advice and anticipatory recommendations that are supported by data to manage inflation and protect the Filipino families,” he added.

To address high inflation, President Ferdinand Marcos Jr. created the Inter-Agency Committee on Inflation and Market Outlook, which functions as an advisory body on strategies to alleviate inflation and ensure food and energy security, while balancing the interests of domestic food producers, consumers, and the broader economy.

Balisacan said that the inflation outlook remains vulnerable to upward risks due to global supply uncertainties, impending wage adjustments, and increases in service fees.

The country’s chief economist added that the Inter-Agency Committee on Inflation and Market Outlook promptly convened to establish coordination mechanisms for data gathering, assessment, and monitoring of supply and demand conditions that exert inflationary pressures.

“By streamlining data collection, the government can share a common understanding, particularly regarding data that can inform public policy and aid in the monitoring and management of inflation,” Balisacan said.

He added that the committee’s objective is to offer proactive policy recommendations regarding emerging threats to food supply, such as the potential escalation of African Swine Fever (ASF) and the weather disturbances linked with the El Niño phenomenon.

“We need a robust monitoring system and forecasting tools supported by reliable and timely information that will assist us in offering appropriate recommendations to the President and the Cabinet. These will help us in developing suitable policies and interventions to achieve food and energy security, while ensuring that our country stays on course to sustained economic transformation and inclusive growth,” Balisacan said.

Core inflation

While the overall inflation saw a decline, core inflation — which excludes selected food and energy items — further increased to 8% in March from 7.8% in February.

Mapa said the 8% core inflation rate was the highest since March 1999’s 8.1%.

The PSA chief said components of the core inflation such as services saw upward movements such as Restaurants and Accommodation Services which went up to 8.3% from 8.1%.

Inflation for Personal Care and Miscellaneous Goods and Services also increased to 5.6% from 5.3%; while Recreation, Sport, and Culture accelerated to 4.6% from 4.4%.

Other commodity groups that were observed to have higher inflation rates include Alcoholic Beverages and Tobacco at 12.2% from 11% and Clothing and Footwear at 5% from 4.8%.

Inflation in Metro Manila, outside NCR

Inflation in the National Capital Region (NCR) followed the national trend as it decelerated to 7.8% in March from 8.7% in February due to slower increases in the Food and Non-Alcoholic Beverages index (9.3% from 11.6%) and Transport (6.2% from 10.8%).

Likewise, inflation in areas outside NCR declined to 7.5% from 8.5% month-on-month also due to slower movements in Food and Non-Alcoholic Beverages at 9.3% from 10.5% and Transport at 5.1% from 8.5%.

Similar to the national trend Housing, Water, Electricity, Gas and Other Fuels index was the third contributor to the downtrend in the area with a 7.4% rate from 8.9% in the prior month.

All regions outside NCR recorded slower inflation rates during the month relative to their respective February annual growths, except the Bangsamoro Autonomous Region in Muslim Mindanao, which posted a higher annual increase of 7.8%.

In March 2023, Cordillera Administrative Region registered the lowest inflation rate at 5.6%, while Region VI (Western Visayas), with 9.1% inflation, remained the highest for four consecutive months.

Inflation for bottom 30%

Inflation felt by the bottom 30% income households in the country also slowed down to 8.8% from 9.7% in February.

Mapa said the lower annual growth in the index of the heavily-weighted Food and Non-Alcoholic  Beverages  at  9.5% during the month  from 10.3% in February 2023 primarily pulled down the overall inflation for the income group.

This was followed by Housing, Water, Electricity, Gas and Other Fuels with 9.5% annual mark-up from 12.2% in the previous month. —KBK, GMA Integrated News