THE overall inflation rate recorded in September 2020 remains low and stable, but some upside risks remain, the National Economic and Development Authority (Neda) said.
The country’s overall inflation slightly eased to 2.3 percent in September 2020 from 2.4 percent in August, which brings the year-to-date inflation to 2.5 percent.
“Due to stable supply, free movement of goods and recent structural reforms, inflation in September was well below the midpoint of the central bank’s target at three percent,” Acting Socioeconomic Planning Secretary Karl Kendrick Chua said.
The Bangko Sentral ng Pilipinas (BSP) said the resulting year-to-date average inflation rate of 2.5 percent was within the government’s target range of three percent percent ± one percentage point for the year.
Overall inflation eased further due mainly to the deceleration in food and non-alcoholic beverages inflation. The lower food inflation can be traced to slower price increases of meat, milk, cheese and eggs as well as the continued decline in vegetable prices in September. In addition, year-on-year inflation for alcoholic beverages and tobacco moderated but remained at double-digit rates. By contrast, non-food inflation increased in September owing to higher inflation for transport services and education.
“The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation is expected to remain benign over the policy horizon, with the balance of risks tilting toward the downside owing mainly to potentially deeper disruptions to domestic and global economic activity amid the pandemic,” the central bank said.
Moreover, Chua emphasized that landmark reforms, such as the Rice Tariffication Law of 2019, enabled the country to withstand supply shocks that could have otherwise threatened overall price stability.
However, the onset of La Niña, the continued presence of African swine fever in the country, imposition of localized lockdowns and supply chain bottlenecks could pose upside risks to the low inflation environment.
“Concerned government agencies and local government units also need to strengthen the implementation of its phytosanitary and biosecurity measures and intensify its meat inspection efforts. This is to suppress the spread of potentially contaminated meat products, as new cases of African swine fever and avian influenza are reported,” the Neda chief said.
He said that the government could also explore and expand projects that will improve the country’s water management systems, distribute climate-resilient seed varieties, provide post-harvest facilities, and ensure business continuity and delivery of goods across the country, as these will all be important sectors to address the potentially adverse effects of these risks.
New waves of Covid-19 cases around the world and slower than expected economic recovery continue to put downward pressures on global oil prices. Despite this, Chua assured that the government is closely monitoring global price movements to remain ready to address any potential shocks. (PR)