Inflation rate in August slowed to a three-month low of 2.4 percent from 2.7 percent in July on lower prices of food and non-alcoholic beverages, the Philippine Statistics Authority said Friday.
Data from the PSA, however, showed the August inflation was faster than 1.7 percent posted in the same month last year.
Inflation in the first eight months averaged 2.5 percent, within the government’s target range of 2 percent to 4 percent for 2020.
Dennis Mapa, national statistician and civil registrar general, said in a virtual press briefing the slowdown in the heavily-weighted food index contributed largely to the slower inflation in August. He said the food index alone comprised around 35.5 percent, or a third of the CPI basket.
“There was a stable supply of food that is why inflation eased in August,” he said. Mapa said rice, meat, fish and vegetables all showed stable prices for the month.
Mapa also said there was no indication of a weakening spending power of Filipinos during the lockdowns in August. “Our reading is there is an abundant supply of food products,” he said.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the August inflation was consistent with their expectation that it would remain benign over the policy horizon.
“The balance of risks tilts towards the downside owing largely to potential disruptions to domestic and global economic activity of the ongoing pandemic,” Diokno said.
Diokno said the BSP remained ready to deploy all available measures in its toolkit in fulfillment of its mandate as it continues to assess the impact of the pandemic to the economy.
ING Bank Manila senior economist Nicholas Mapa said that despite the downside surprise in the August inflation, the BSP would likely keep the policy rates “untouched” until 2021.
The PSA data showed that the heavily-weighted food and non-alcoholic beverages declined at an annual rate of 1.8 percent during the period, from 2.4 percent in the previous month.
Other indices that posted lower inflation during the month were alcoholic beverages and tobacco, 17.7 percent; clothing and footwear, 1.9 percent; furnishing, household equipment and routine maintenance of the house, 3.9 percent; education, 0.1 percent; and restaurant and miscellaneous goods and services, 2.3 percent.
The August print fell below the Bangko Sentral ng Pilipinas’ forecast of 2.7 percent to 3.3 percent inflation for the month.
The policy-making Monetary Board of the Bangko Sentral maintained the record-low benchmark interest rates of 2.25 percent in August because of the manageable inflation environment.
Improving supply chain efficiency in agriculture is needed to ensure a low and stable inflation in the country amid the ongoing COVID-19 pandemic and impending typhoons, according to the National Economic and Development Authority.
NEDA said the lower inflation in August was due to the unhampered movement of food and other essential commodities across the country and the benefits of the rice tariffication law which ensured ample supply.
“As we continuously implement varying levels of community quarantines and localized lockdowns in the country, we need the government and the private sector to tap local agricultural produce and maximize the use of digital technologies to ensure stability in the supply chain,” said acting NEDA Secretary Karl Kendrick Chua.
Chua underscored the need to effectively manage the supply and allocation of agricultural commodities to ensure enough buffer stock, prevent wastage and spoilage and minimize the losses of farmers. This includes facilitating the delivery of vegetables and other agricultural commodities to Metro Manila and other regions.
“Investments in cold storage facilities and innovations in food packaging and processing need to be increased as well, alongside the boosting of agricultural production, both in rural and urban areas, through the government’s Plant, Plant, Plant program,” Chua said.
He said to mitigate possible losses and to ensure quick response to possible disaster-prone areas, there is a need for preemptive preparations on production support, crop insurance and other recovery programs, as La Niña is seen to come by late September or October.