By Chino Leyco
Inflation slowed down to 6 percent last month, the first time it eased this year amid lower costs of food and fuel products, data from the Philippine Statistics Authority (PSA) showed Wednesday.
The November inflation rate was slower compared with the nearly 10-year high of 6.7 percent in the previous month, but higher than the 3.0 percent registered in the same month in 2017.
The actual November inflation is lower than market expectations of around 6.2 percent to 6.3 percent, but within the Bangko Sentral ng Pilipinas’ (BSP’s) forecast of 5.8 percent to 6.6 percent.
Slowdown in the annual increases were noted in the indices of food and non-alcoholic beverages at 8.0 percent; housing, water, electricity, gas, and other fuels, 4.2 percent; and communication, 0.4 percent.
The education index, meanwhile, continued to post an annual rate of -3.8 percent, while transport index retained its previous month’s 8.9 percent. The rest of the commodity groups exhibited higher annual mark-ups.
Excluding selected food and energy items, core inflation continued to move upward as it settled to 5.1 percent in November from 4.9 percent in October and 2.4 percent in the same month last year.
The annual gain in food index further eased to 7.7 percent in November. In the previous month, its annual rate was noted at 9.2 percent and in November, 2017, 3.1 percent.
The drop in food inflation was caused by the improvement in the supply of key agricultural commodities such as rice, fish and seafood, meat, vegetables, corn, and fruits.
‘Empathy to public clamor’
Presidential spokesman Salvador Panelo attributed the lower inflation to President Duterte’s “empathy to public clamor” and his “decisive action” to stabilize the prices of agriculture and fishery products at reasonable levels as well as keeping sufficient supply in the markets.
To temper the soaring inflation rate, Duterte authorized in September the removal of non-tariff barriers, streamlining importation procedures for agricultural products, and seamless transportation of the commodities from the port to the public markets.
“These measures address issues on food supply, among others, as there is a marked decrease in food inflation from 9.4 percent in October to 8 percent in November. Prices of rice, corn, fish, meat, fruits, and vegetables have gone down,” Panelo said.
“We assure everyone that we will continue to be vigilant and monitor the prices of basic goods and commodities to ensure that hunger incidence and food insecurity are eradicated,” he added.
Increase supply – Arroyo
Speaker Gloria Macapagal Arroyo was elated by the drop in inflation rate.
“Well, I’m very happy to hear about the easing inflation,” she told reporters in an ambush interview.
She said the government should flex its muscles to address the root causes of inflation. She said increasing the supply of the basic commodities is among the measures to address inflation.
“I guess the moral of the story is, when there is a supply-side inflation, then we increase the supply. But we should do it as soon as we detect the supply-side inflation,” Arroyo said.
The Duterte administration’s economic managers said the anti-inflationary measures taken by the government have already took effect, pointing to continuing reduction going forward.
“It is comforting for us that the slowdown will alleviate the struggles of poor Filipinos, especially now that the holiday season is just around the corner,” the economic team said in a statement. “This makes us even more determined in curbing inflation and enforcing all measures to guarantee food security,” they added. At end-November, inflation averaged 5.2 percent, which is 1.2 percentage points above the high end of the government’s inflation target range of 2.0 percent to 4.0 percent.
With the recent passage of the Rice Tariffication bill in Congress, the Cabinet officials said “we expect rice prices to go down further still.”
“But this measure, which opens the rice market to qualified players, should be coupled with the full operationalization of the National Window System to allow seamless imports processing and to avoid unwarranted delays,” they added.
Still, they said, the country should invest in farm mechanization and adopt the latest technology in crop management that includes the utilization of high-yielding and resilient crops.
“This will improve the productivity of the agriculture sector, which remains vulnerable to changing weather conditions,” the economic managers said. “We are optimistic that inflation will stabilize further in the near term. But we will keep a vigilant eye on upward pressures such as volatility in the global oil market,” they added. (With reports from Genalyn D. Kabiling and Charissa L. Atienza)