The inflation rate in September further slowed to a 40-month low of 0.9 percent from 1.7 percent in August, pulled down mainly by the decline in the index of heavily-weighted food and non-alcoholic beverages, the Philippine Statistics Authority said Friday.
Data showed the rate was the first time that inflation settled below 1 percent since 0.9 percent in May 2016. The September 2019 inflation was also significantly slower than the peak of 6.7 percent in September 2018.
The September figure brought inflation in the first nine months to an average of 2.8 percent, below the mid-point of the target range of 2 to 4 percent this year.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the September inflation of 0.9 percent was within the BSP’s forecast range of 0.6 percent to 1.4 percent for the month and driven by the continued decline in rice prices and electricity rates, which offset higher prices of petroleum and selected food products.
“The latest inflation outturn is likewise consistent with the BSP’s prevailing assessment that inflation will continue to decelerate in the third quarter of 2019 and pick up slightly in the remaining months of 2019,” Diokno said.
He said the BSP continued to expect the average inflation to firmly settle within the target range of 2 percent to 4 percent 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. 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,” Diokno said.
He said the BSP would continue to keep a close watch over latest economic developments here and abroad to ensure that the monetary policy stance remained consistent with the BSP’s price stability objective while being supportive of economic growth.
ING Bank Manila senior economist Nicholas Mapa said inflation continued to head south as base effects hit home. He said the September 2019 print dropped to 0.9 percent with the index heavy food basket weighing mightily on headline inflation.
“Last year’s inflation spike was supply slide oriented and and with bottlenecks addressed, inflation has decelerated quickly all the more after BSP’s 175-bps rate hike barrage,” Mapa said.
“Inflation will likely revert [to] target once base effects fade. Price pressures appear to be benign as food prices are expected to be more stable given new legislation and government’s openness to importing food stuffs,” Mapa said.
The PSA said contributing primarily to the downtrend in inflation last month was the 0.9-percent annual rate of decrease in the index of the heavily-weighted food and non-alcoholic beverages.
Likewise, the annual change of the transport index decreased by 0.9 percent in September 2019.