Inflation down anew to 4.3% in October

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Inflation down anew to 4.3% in October
Slower increases in food prices pull down inflation for two consecutive months

MANILA, Philippines – For the second consecutive month, food price increases have slowed down, thus pulling down inflation as well to 4.3% in October, the National Economic and Development Authority (NEDA) reported on Wednesday, November 5.

In September, inflation rate hit 4.4%, sliding from August’s 4.9%.

In particular, lower food price increases have been recorded for two consecutive months.

For October, food inflation registered 7.2% year-on-year versus September’s 7.8%.

“Ample supply of meat, fish, and vegetable items in the market and easing of commodity prices helped reduce price pressures,” said NEDA director-general Arsenio M. Balisacan.

The easing of commodity prices in the international market amid improved supply were reflected locally, NEDA noted.

The easing of the bottleneck in the Manila port starting September, following the removal of the city government’s daytime truck ban, is also seen to have helped soften price pressures in October, Balisacan added.

The government will continue to explore more lasting solutions to the port congestion problem to avoid disruptions in the domestic supply chain that could result in higher transportation costs, NEDA said in a statement.

However, such favorable impact was negated by the year-on-year uptick in electricity charges during the period.

Electricity, gas, and other fuels’ price indices went up to 3.2% in October from 2.4%.

The price increase in electricity is attributed to the P0.67 ($0.015*) per kilowatt hour (kWh) generation charge of the Manila Electric Company (Meralco).

The year-to-date inflation was at 4.3%, still within the Development Budget Coordination Committee’s target of 3% to 5% for 2014.

“Overall, the tempered inflation outturn is expected to provide the Bangko Sentral ng Pilipinas (BSP) room to possibly keep its key policy rates steady,” Balisacan said.

On October 23, the Monetary Board kept the BSP key policy rates unchanged at 4% for the overnight borrowing or reverse repurchase (RRP) facility and 6% for the overnight lending or repurchase (RP) facility.

Such was the decision to ease pressures for commodity prices, robust domestic demand, adequate domestic liquidity, and strong bank lending growth.

But on the external front, Balisacan said global economic prospects are seen to stay uneven, thus mitigating upward pressures on commodity prices.

As such, “the government will remain vigilant against inflation risks and will continue efforts to ensure supply sufficiency of key commodities and to mitigate the impact of a possible dry spell,” NEDA said.

 *$1 = P44.98

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