Inflation decelerates to 4-year low in September

By Anna Leah Gonzales, Philippine News Agency

FILE: A buyer checks the texture of red bell peppers sold at the Pasna-an Agricultural Cooperative at the Department of Agriculture-Kadiwa Center in Diliman, Quezon City on Tuesday (Feb. 7, 2023). (PNA photo by Ben Briones)

MANILA – The country’s headline inflation further eased to 1.9 percent in September this year, the lowest recorded since the 1.6 percent in May 2020.

Headline inflation was at 3.3 percent in August and 6.1 percent in September last year.

In a briefing on Friday, National Statistician Dennis Mapa said the latest data brought the year-to-date inflation to 3.4 percent, which is well within the government’s 2 to 4 percent target.

Mapa said the downtrend in the overall inflation was due to the slower annual increase in food and non-alcoholic beverages at 1.4 percent from 3.9 percent in August.

Food inflation, in particular, eased to 1.4 percent in September from 4.2 percent the previous month.

Mapa said the deceleration in food inflation was due to the slower inflation rate of rice at 5.7 percent from 14.7 percent in August.

Other contributors to the lower food inflation include the faster decline in the inflation of vegetables, tubers, cooking bananas, and pulses.

Lower inflation rates were also reported for corn, flour, bread and other bakery products, meat and other parts of slaughtered land animals, and ready-made food and other food products.

In a separate statement, the National Economic and Development Authority (NEDA) assured the public that the government remains committed to stabilizing commodity prices.

“The continued slowdown in inflation is expected to boost consumer confidence, driving higher spending and consumption and fueling business expansion,” said NEDA Secretary Arsenio Balisacan.

“Additionally, easing food prices will relieve low-income households, enabling them to allocate more to other essential needs such as education and health. We will sustain the momentum as we assure the public that we will continue to pursue and carry out strategies to maintain stable prices of food and other commodities,” he added.

Balisacan said the Executive Order issued by President Ferdinand R. Marcos Jr., which reduced the rice tariffs to 15 percent, helped bring down rice prices.

“While we expect lower tariffs to reduce rice prices, we should continuously support local production through increased agricultural funding to complement this short-term measure,” Balisacan said.

The NEDA chief assured the public that the government is ready to address other inflationary pressures affecting food, such as the continuing prevalence of African swine fever (ASF), through the delivery of vaccines.

Following the successful rollout of the ASF vaccine in Lobo, Batangas, Balisacan said the Department of Agriculture is set to expand vaccination efforts to La Union, Quezon, Mindoro, North Cotabato, Sultan Kudarat, and Cebu.

Balisacan said the signing of the Anti-Agricultural Economic Sabotage Act, which aims to eradicate hoarding, anti-competitive practices, and other illegal activities, will also ensure access to affordable food.

“With the passage of this law, we protect our farmers and, at the same time, ensure that every Filipino has access to affordable food, which is vital in protecting the most vulnerable members of society while we work toward achieving inclusive economic progress,” Balisacan said.

He added that the government is bracing for the impact of La Niña, which, according to PAGASA, started in September and is expected to persist until the first quarter of 2025.

Balisacan noted that the government’s strategies against La Niña include improvements in early warning systems, utilization of communication systems to issue warnings upon dam openings, addressing the possible spread of diseases to livestock or people, and greater involvement of local government units in information dissemination.

“We want Filipinos, particularly vulnerable families, to be shielded from various shocks and continue to have access to affordable goods in the coming months as we protect the gains we have made and sustain our economic progress,” said Balisacan.

‘Plenty of room’

House Ways and Means Committee chair and Albay Rep. Joey Salceda said the low September inflation figures give the Marcos administration “plenty of room” to pursue more ambitious spending programs in economic and social services.

“It also gives the Bangko Sentral ng Pilipinas much room for maneuver when the US (United States) Fed and other central banks inevitably adjust their interest rate levels,” Salceda said in a statement.

He said the low food inflation was due to “massive disinflation” in fruits and vegetables and a slight reduction in prices for fish.

He added that sugar inflation, which had consistently hovered in the mid-20s in recent months, turned negative, indicating that prices may be normalizing.

Salceda, however, cautioned against complacency, particularly with regard to rice inflation, which stood at 5.7 percent.

“We must remain vigilant about rice inflation, which the poor tend to be most sensitive to,” he said.

He hoped that the October harvest season would further lower the rate.

Salceda also flagged corn prices, with a 6.9 percent inflation rate, as a key concern due to its importance as an input for meat, poultry, and fish prices.

He said the House of Representatives created a five-committee panel to tackle food security and food prices. These are Committees on Ways and Means (principal panel), Trade and Industry, Food and Agriculture, Social Services, and Special Committee on Food Security.”

He said the quint-committee will focus on four goals: achieving a retail price of PHP20 per kilogram of rice; boosting annual gross value added growth in agriculture to at least 2 percent; reducing agricultural production losses from as much as 30 percent to 15 percent; and bringing livestock and poultry prices to regionally competitive levels.

Finance Secretary Ralph Recto, for his part, said that with the better-than-expected inflation outcome for September, the full-year inflation rate is expected to settle at around 3.2 percent.

“This gives the BSP more room to be aggressive in its monetary policy easing to help the economy grow at a faster rate and support the government in increasing its revenue collections,” Recto said in a statement.

Medium-term inflation path

The Bangko Sentral ng Pilipinas (BSP), meanwhile, said the latest inflation outturn is consistent with its assessment that inflation will continue to trend downwards over the succeeding quarters due to negative base effects and the easing of supply pressures for key food items.

In a statement, the BSP said the balance of risks to the inflation outlook continues to lean toward the downside for 2024 and 2025 with a slight tilt to the upside for 2026.

“The downside risks are linked mainly to the impact of the lower import tariffs on rice, while upside risks come from higher electricity rates and external factors such as worsening geopolitical risks in the Middle East and Ukraine, which could impact global oil and food prices as well as the exchange rate,” said the BSP.

“The BSP will consider the latest inflation outturn at the upcoming monetary policy meeting on October 16, 2024,” it added.

The BSP assured that the Monetary Board will continue to take a calibrated approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment. (with a report from Filane Cervantes/PNA)