Economist: Holiday mode to drive inflation

PRICES of basic commodities rose slower in August compared to the same period last year after the government recorded price decelerations in food and alcoholic beverages.

Using 2006 prices as base year, the National Statistics Office (NSO) put the inflation rate at 4.7 percent last month, as compared to 5.1 percent measured in August 2010.

The figure fell within the Bangko Sentral ng Pilipinas’ (BSP) forecast of 3.9 to 4.8 percent for the month, which still used 2000 as base. Last July’s inflation rate was at 5.1 percent.

Among others, slowdowns in the indices of clothing and footwear; housing, water, electricity, gas and other fuels; recreation and culture; and education contributed to the downward movement of prices, the NSO said.

As of August 31, Department of Energy (DOE) tallied a year-to-date net increase of diesel in Metro Manila at P4.40 per liter, while gasoline is at P6.55 per liter due to price rollbacks.

Asked for comment, University of Asia and the Pacific economist Cid Terrosa said that the latest figure was reflective of the weakening global economy where consumers tended to save rather than spend.

Last quarter’s consumer confidence index was at -24.1 percent as the buying public was weighed down by escalating prices of petroleum products and basic goods and services.

“But I think it will go up a bit in the next few months because the last quarter is a peak period for buying goods and services (due to the Christmas holiday rush). The increase, however, won’t be remarkable due to adverse global economic conditions,” he told Sun.Star.

Businesses around the world remained jittery over the effects of a lethargic US economy and debt woes in the Euro zone, which both accounted for nearly half of the global economy.

A sputtering US economy pushed dollar-denominated oil prices down, paving the way for rollbacks at home. It also made imports of finished goods and services cheaper here in the Philippines but exports more expensive.

While Filipinos are expected to open their pockets in anticipation of the Christmas season, Terrosa said inflation may only hover between 4.7 and 4.9 percent in September.

The BSP wants to keep average inflation this year at 3 to 5 percent. (Virgil Lopez/Sunnex)