INFLATION in September has further eased amid slower increases in rice prices.
The Philippine Statistics Authority (PSA) on Friday, Oct. 4, 2024, reported that the inflation rate for September 2024 sharply dropped to 1.9 percent from 3.3 percent in August, marking the lowest level since May 2020’s 1.6 percent.
This latest print brings the year-to-date inflation to 3.4 percent, still within the government’s target range of two to four percent and broadly consistent with inflation trends in other Asean economies, according to the National Economic and Development Authority (Neda).
It also surpassed expectations, falling under the median estimate of 2.5 percent from private sector analysts and the Bangko Sentral ng Pilipinas’ (BSP) forecast of two percent to 2.8 percent.
Inflation is the rate at which the general prices of goods and services in an economy rise over time. As prices increase, the purchasing power of money decreases, meaning you can buy less with the same amount of money.
Sharp reduction
The PSA said the sharp reduction in September’s inflation was primarily due to slower increases in the prices of food and non-alcoholic beverages, which accounted for 69.1 percent of the decline; transport (14.6 percent); as well as housing, water, electricity, gas, and other fuels (9.4 percent).
Rice inflation, which was a big contributor in the past months’ inflation, dropped significantly to 5.7 percent from 14.7 percent the previous month. The steady supply of high-value crops amid favorable weather conditions also reduced vegetable prices to -15.8 percent from -4.3 percent.
Retail rice prices are expected to drop more significantly in the coming months, as India lifts its export ban on non-basmati white rice and retailers run out of inventories purchased at higher prices before the tariff reduction.
“The continued slowdown in inflation is expected to boost consumer confidence, driving higher spending and consumption and fueling business expansion,” said Neda Secretary Arsenio Balisacan.
“Additionally, easing food prices will relieve low-income households, enabling them to allocate more to other essential needs such as education and health,” he said.
Finance chief Ralph Recto expects the full-year inflation rate to settle at around 3.2 percent.
He said this gives the BSP more room to be aggressive in its monetary policy easing to help the economy grow at a faster rate and support the government in increasing its revenue collections.
Inflation outlook
The BSP said the inflation outlook continues to lean toward the downside for 2024 and 2025 with a slight tilt to the upside for 2026. The central bank said the downside risks are linked mainly to the impact of the lower import tariffs on rice, while upside risks come from higher electricity rates and external factors such as worsening geopolitical risks in the Middle East and Ukraine, which could impact global oil and food prices as well as the exchange rate.
The BSP said it will consider the latest inflation outturn at the upcoming monetary policy meeting on Oct. 16. “The Monetary Board will continue to take a calibrated approach in ensuring price stability conducive to the balanced and sustainable growth of the economy and employment,” the BSP said.
Moreover, Balisacan said the government will keep up its efforts and ensure the public that they will continue working to maintain stable prices of food and other goods.
To address other inflationary pressures on food, such as the ongoing impact of African Swine Fever, the Department of Agriculture plans to extend vaccination efforts to La Union, Quezon, Mindoro, North Cotabato, Sultan Kudarat and Cebu. An additional 150,000 doses of the Avac Vietnam vaccine will be provided for further testing.
The recently enacted Anti-Agricultural Economic Sabotage Act is also expected to curtail the rampant smuggling, cartels, profiteering and hoarding of agricultural products to ensure food security for Filipinos.
The government is also bracing for the impact of La Niña, which started in September and is expected to persist until the first quarter of 2025. / KOC