November inflation rate hit 3.3% on higher food prices

The inflation rate in November climbed to a 20-month high of 3.3 percent from 2.5 percent in October on higher food prices following a series of strong typhoons that exacerbated the impact of COVID-19 pandemic, data from the Philippine Statistics Authority show Friday.

The November figure was higher than the 1.3-percent inflation rate in November 2019 and the highest increase in consumer prices since March 2019 when the figure also reached 3.3 percent.

The November figure brought the average inflation rate in the first 11 months to 2.6 percent, still within the government’s target range of 2 percent to 4 percent for the year.

Acting National Economic and Development Authority Director-General Karl Kendrick Chua said transport services and agricultural products such as meat and vegetables were the top contributors to the November inflation. “This is due to the restrictions on public transport as a result of COVID-19, persistence of African Swine Fever and damage and losses in high-value crops following the onslaught of several typhoons and flooding in November 2020,” he said.

Food inflation accelerated to 4.5 percent in November from 2.1 percent in October following weather disturbances.

Based on the latest estimates of the Department of Agriculture as of Nov. 17, the combined amount of damage and losses to the agriculture sector brought by typhoons Ofel, Nika, Pepito, Quinta, Rolly, and Ulysses reached P15.3 billion. Among the regions, Bicol was the most affected, followed by CALABARZON, Cagayan Valley, and Central Luzon.

“Our experience with the recent typhoons has highlighted the need for long-term engineering interventions, reforestation, and coordinated flood management systems across different LGUs and the need to intensify the distribution of climate-resilient technologies and other production support assistance to mitigate production loss in the agriculture sector,” said Chua.

Meanwhile, inflation for transport services remained elevated in the last six months, as a result of social distancing directives and reduced passenger capacities in all modes of public transport.

Chua cited the need to revisit public transport system guidelines and for LGUs and the Land Transportation Franchising and Regulatory Board to monitor and review prevailing and unwarranted fare increases in public transport.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said, however, the November inflation was “transitory” and the average this year could still settle within the target range.

“The November 2020 inflation of 3.3 percent was slightly higher than BSP’s forecast range of 2.4 percent to 3.2 percent, driven mainly by higher food inflation, particularly vegetables, fish, fruits and meat,” Diokno told reporters in a message.

He said the impact of supply disruptions due to recent typhoons was expected to be largely transitory. He said downside risks to the global and domestic economy remained despite the progress in the development of vaccines for COVID-19.

Logistical challenges in the distribution of the vaccine would have to be addressed before the recovery could resume, he said.

“The BSP stands ready to deploy its full arsenal of instruments, as needed, in fulfillment of its mandate to maintain price and financial stability conducive to sustainable economy growth and employment,” Diokno said.

The PSA said the annual increase of 4.3 percent in the heavily-weighted food and non-alcoholic beverages primarily pushed up the overall inflation in November.

Topics: inflation rate , COVID-19 pandemic , Philippine Statistics Authority
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