Inflation rises to 6.1%; rice price surge blamed

Philippine Tribune
Philippine Tribune

(UPDATE) INFLATION accelerated to 6.1 percent in September amid a sharp increase in key food items and transport costs, the Philippine Statistics Authority (PSA) reported on Thursday.

The result — higher than August’s 5.3 percent but down from the 6.9 percent posted a year earlier — hit the upper end of the Bangko Sentral ng Pilipinas’ (BSP) 5.3- to 6.1-percent forecast for the month.

It also exceeded the 5.4-percent median in a Manila Times poll of economists.

“The uptrend in the overall inflation in September 2023 was primarily brought about by the higher year-on-year increase in the heavily weighted food and nonalcoholic beverages at 9.7 percent during the month from 8.1 percent in the previous month,” the PSA said in a statement.

“Transport, with an inflation rate of 1.2 percent during the month from 0.2 percent in the previous month, also contributed to the uptrend of the headline inflation,” it added.

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Core inflation, which excludes volatile food and energy items, continued to slow. It eased to 5.9 percent from August’s 6.1 percent but remained higher than the 5.0 percent seen in September last year.

Year to date, overall inflation averaged 6.6 percent, still well over the BSP’s 2.0- to 4.0-percent target, while core inflation reached 7.2 percent.

Food prices rise

Food inflation at the national level rose to 10.2 percent last month, up from 8.2 percent in August.

National Statistician Claire Dennis Mapa noted that rice inflation, which was primarily behind the higher food inflation, recorded a double-digit surge to 17.9 percent from 8.7 percent.

Meat and other parts of slaughtered land animals also saw inflation pick up to 1.3 percent from a 0.1-percent contraction in August.

“In addition, a faster annual growth rate was noted in fruits and nuts at 11.6 percent in September 2023 from 9.6 percent in the previous month,” the PSA said, adding that corn also posted a rise to 1.6 percent after declining 0.9 percent.

The BSP warned that inflation would remain elevated in the coming months due to the continued impact of supply shocks on food prices and a rise in global oil prices. The rate, however, is still expected to return to the 2.0- to 4.0-percent target before the end of the year.

“The potential impact of new petitions for transport fare adjustments, higher domestic prices of key food items facing persistent supply constraints, higher-than-expected minimum wage adjustment in areas outside NCR (National Capital Region), impact of El Niño weather conditions on food prices and utility rates, and higher electricity rates are the major upside risks to the inflation outlook,” the BSP said in a statement.

“Meanwhile, the impact of a weaker-than-expected global recovery is the primary downside risk to the outlook.”

Monetary authorities have paused from hiking key interest rates for the last four policy meetings after inflation began slowing from January’s 14-year high of 8.7 percent. Rate hikes totaling 425 basis points were ordered beginning May last year as inflation surged in the wake of Russia’s invasion of Ukraine.

The central bank said it was “ready to resume monetary policy tightening as necessary to prevent the renewed broadening of price pressures as well as the emergence of additional second order effects in view of the persistent upside risks to the inflation outlook.”

BSP Governor Eli Remolona Jr. last month said a rate hike would be on the table in November.

Govt pledges support

Socioeconomic Planning Secretary Arsenio Balisacan, meanwhile, said the government would continue supporting sectors that were most affected by inflation.

“The government is committed to providing targeted assistance to affected vulnerable segments of the population while food prices remain elevated,” he said in a statement.

Balisacan added that the Inter-Agency Committee on Inflation and Market Outlook was closely monitoring the demand-and-supply situation to provide the appropriate and timely policy recommendations.

In Malacañang, Presidential Communications Secretary Cheloy Garafil said “the government remains committed to addressing the challenges posed by the 6.1 percent inflation rate … and has initiated a series of measures, including a digital food stamp program, fuel subsidies and targeted assistance for farmers, which extend beyond the short term.”

She added that President Ferdinand Marcos Jr. and his Cabinet were “actively working to alleviate transportation costs and make long-term investments in irrigation and modern farming practices to support our agricultural community.”

“Furthermore, we are pleased to report that our economic managers anticipate a moderation in rice prices, as local production increases due to the onset of the harvest season and the entry of rice imports previously ordered.”

Garafil said that the issuance of Executive Order (EO) 41 last month, which barred local governments from collecting pass-through fees on national roads, would also help.

Higher September inflation came despite Marcos’ having issued EO 39 in August that capped rice prices. The President lifted the directive on Wednesday.

Legislators, meanwhile, expressed optimism that inflation would go down soon as global commodity prices had fallen.

“The September inflation figure is due almost entirely to rice price spikes and the global oil price spike,” Albay 2nd District Rep. Jose Maria Clemente Salceda said.

“The PSA collects data on the first five days of the month and on the 15-17th days, so it captured a lot of the speculative rise in global oil prices, but not the sharp declines that followed September 27,” he added.

Still, Salceda urged the government to continue efforts to mitigate inflation risks.

“Food prices still need to be watched out for, especially because the ‘-ber’ months typically tend to be bonus season, which is naturally inflationary. With sufficient food, we can manage the inflationary impacts of sudden injections of income among employees.”

WITH REPORTS FROM CATHY VALENTE AND RED MENDOZA

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