Inflation eased to a two-month low of 4.6 percent in October from 4.8 percent in September, pulled down by lower annual increases in the prices of food and non-alcoholic beverages, the Philippine Statistics Authority said Friday.
The figure brought the average inflation from January to October to 4.5 percent, above the target range of 2 percent to 4 percent for the year. Inflation settled at 2.5 percent in October 2020.
National statistician and civil registrar general Dennis Mapa said in an online briefing the main source of the downtrend of the October inflation was the slower annual increment registered in food and non-alcoholic beverages index at 5.3 percent, from 6.2 percent in September 2021.
Contributing to the softening of the overall inflation were the lower indices of alcoholic beverages and tobacco, at 9.8 percent; education, 0.7 percent; and restaurant and miscellaneous good and services; 3.8 percent.
Inflation rates were higher in the indices of housing, water, electricity, gas, and other fuels at 4.4 percent; furnishing, household equipment, and routine maintenance of the house, 2.5 percent; health, 3.2 percent; transport, 7.1 percent; and recreation and culture, 1.0 percent.
The October inflation was close to the lower bound of the forecast range of 4.5 percent to 5.3 percent for the month made by the Bangko Sentral ng Pilipinas. The highest inflation recorded this year was 4.9 percent in August.
BSP Governor Benjamin Diokno said Friday that inflation was expected to average above the target range in 2021 but would ease close to the midpoint of the target range in 2022 and 2023.
“The balance of risks to the inflation outlook remains on the upside for the remaining months of 2022, but continues to be broadly balanced for 2022 and 2023. The private sector’s inflation expectation is also consistent with inflation reverting back to the target by 2022,” Diokno said in a statement following the release of the inflation data.
“The BSP remains of the view that supply-side price pressures are best addressed by timely non-monetary interventions that could ease domestic supply constraints. In this regard, the national government is currently pursuing direct measures to enhance the availability of key goods, such as pork, rice and fish,” he said.
Diokno said the recent grant of fuel subsidies, amounting to P1 billion to affected public utility vehicle operators and the increased allowable ridership could help support the transport sector and help prevent second-round effects amid rising oil prices.
“The BSP stands ready to maintain its accommodative monetary stance for as long as necessary to support the economy’s sustained recovery to the extent that the inflation outlook would allow. The BSP is also reviewing its assessment of the price environment ahead of the Nov. 18 monetary policy meeting,” Diokno said.
The PSA said meat inflation eased to 11.9 percent in October from 15.6 percent in September. This was driven by the decline in pork inflation to 23.3 percent from 36.4 percent, following the issuance of Executive Order Nos. 133 and 134 in May to help address pork supply shortages due to the African Swine Fever.
Pork prices fell by an average of 4.1 percent month-on-month from September, its largest drop since the height of the ASF in 2020.
The Department of Agriculture issued Memorandum Circular No. 23, Series of 2021 on Oct. 25 to address the low utilization of the pork minimum access volume plus by allowing the distribution of imported pork to areas outside the NCR Plus.
Economic Planning Secretary Karl Kendrick Chua said one of the government’s highest priorities amid the mobility restrictions was to ensure stable access to affordable food.
“The temporary importation of pork has worked in the National Capital Region. We need to leverage this momentum to allow unhampered supply to the wet markets and to all the regions,” Chua said.
ING Bank Manila senior economist Nicholas Mapa said meat prices stabilized somewhat after the government ramped up pork importation to augment supplies depleted by the proliferation of ASF.
Mapa said despite the downside surprise in October inflation, the average in the first 10 months of 4.5 percent remained above the central bank’s target.
“Despite elevated inflation, Bangko Sentral ng Pilipinas continues to push back on rate hike calls, citing the need to support the economic recovery. BSP Governor Diokno indicated his preference to look past supply side-induced price spikes and that national government intervention (pork importation or fuel subsidies) would be more effective at addressing these types of price pressures,” Mapa said.
“We expect BSP to maintain its current policy setting for the balance of 2021 and we retain our expectation for a possible rate adjustment from monetary authorities in the second quarter of 2022,” he said. With AFP
