Inflation rate in October rose slightly to 2.5 percent from 2.3 percent in September, led by faster increases in the prices of food and non-alcoholic beverages, the Philippine Statistics Authority said Thursday.
The October print was also faster than the 0.8-percent inflation recorded in October 2019. Inflation rate in the first 10 months settled at 2.47 percent, below the midpoint of the target range of 2 percent to 4 percent for the year.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the October inflation was within the bank’s forecast range of 1.9 percent to 2.7 percent for the month.
“The latest inflation outturn is consistent with the BSP’s prevailing assessment of favorable inflation dynamics over the policy horizon. The balance of risks continues to lean toward the downside due largely to the impact on domestic and global economic activity of possible deeper economic disruptions caused by the pandemic,” Diokno said in a statement.
He said the Monetary Board would consider the latest inflation outturn together with the upcoming release of the third-quarter GDP data in its assessment of the outlook for inflation and economic activity for the monetary policy meeting on Nov. 19.
“The BSP stands ready to deploy all available measures in its toolkit in fulfillment of its policy mandate as it continues to assess the impact of the global health crisis on the domestic economy,” he said.
The National Economic and Development Authority said there were upside risks from the adverse impact of inclement weather and the lingering presence of the African swine fever which affected the livestock sector.
“Aside from the ongoing pandemic, the country has been facing adverse weather conditions in the recent months. Effects of typhoons and La Niña on the agriculture sector and food prices pose upside risks to inflation,” said acting Economic Planning Secretary Karl Kendrick Chua.
Latest projections from the Department of Agriculture showed that the supply of key food products would likely remain sufficient until the end of the year. However, agricultural damage may put food supply at risk, and thus put pressure on prices.
“A key strategy for food security and food price stability during uncertain times is to prolong the shelf life of agricultural goods. This may come by way of introducing proper technology and increasing investments in warehouses and cold storage facilities in strategic locations,” the NEDA chief said.
Chua emphasized the need for the government and the private sector to tap local producers in nearby provinces or regions to make up for the lost harvest in disaster-stricken areas.
“Relief efforts in heavily affected areas are being prioritized. NEDA, meanwhile, has been participating in post-disaster needs assessment led by the Office of Civil Defense. We will provide an analysis of the effects of the disasters on various sectors, including macroeconomic impact,” he said.
Chua said the support to the agriculture sector was needed because of the continued presence of ASF in the country which resulted in tighter supply and higher prices of pork in Luzon.
“The government will strictly implement biosecurity measures and food safety protocols to curb the spread of animal diseases in farms and guarantee safe consumption of meat products,” he said.
ING Bank Manila senior economist Nicholas Mapa said food prices ticked higher in October because of the swine flu but depressed demand kept price gains in check.
Mapa said transport prices accelerated 7.9 percent as quarantine restrictions forced public transport operators to hike fares in compliance with social distancing protocol.
“Meanwhile, base effects were also one reason for the bounce in inflation with October 2019 representing the low point for last year’s inflation swoon,” Mapa said.
Mapa said the depressed economic conditions would likely keep inflation at the lower-end of the BSP’s target range for the balance of the year.
