Inflation cools to 0.9% as rice prices drop in September 2019

MANILA, Philippines (UPDATED) – Inflation or the increase in the prices of goods continued its downtrend at 0.9% in September, the Philippine Statistics Authority announced on Friday, October 4.

The latest figure is lower than the 1.7% recorded in August. It is also within the estimates of the Bangko Sentral ng Pilipinas (BSP) and other economists, but already below the target band of 2% to 4%.

This brings the year-to-date inflation rate to 2.8%. (READ: Duterte's economic team sees stable inflation until his term ends)

The lower figure comes as farmgate and retail prices of rice drop under the rice tariffication regime. Rice comprises the largest chunk in computing the inflation figure. (MAP: Palay prices in the Philippines)

As of the 2nd week of September, regular milled rice retails at P37.79 per kilo, while well milled rice is at P42.27.

However, these prices are still not within the P27 per kilo projection of economic managers.

Mixed movements were posted among the commodity groups during September.

The alcoholic beverages and tobacco index was higher at 4.2% in September, from 1.8% in August.

Clothing and footwear as well as restaurant and miscellaneous goods and services both moved up at a slower pace of 0.2% from August's rates of 0.4% and 0.3%, while education cooled to 0.5% from 0.8%.

Non-food items dropped to -0.2% from -0.1%.

Housing, water, electricity, gas, and other fuels rose to 0.4% from -0.1%.

The index of furnishing, household equipment, and routine maintenance of the house retained its August rate of 0.3%. The same goes for health (0.2%) and food and non-alcoholic beverages (-0.1%).

Recreation and culture recorded zero inflation during September.

The BSP said it continues to expect average inflation to firmly settle within the target range for 2019 to 2021.

"The recent volatility in global crude oil prices due to geopolitical tensions in the Middle East could generate upward price pressures over the near term," the BSP said.

"On the other hand, deepening trade tensions between China and the US along with other countries in the region have raised global economic uncertainty, which poses a downside risk to the inflation outlook," it added.

As year-to-date inflation settles within target range, the BSP has reduced interest rates and the amount banks need to keep in their reserves to support economic growth. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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