Inflation rate in September decelerated to a four-month low of 2.3 percent from 2.4 percent in August, pulled down by slower increases in the prices of food and non-alcoholic beverages despite the lingering impact of the COVID-19 pandemic, the Philippine Statistics Authority said Tuesday.
The rate brought the average inflation in the first nine months to 2.5 percent, within the target range of 2 to 4 percent set by the government.
The September datat, however, was faster than the 0.9-percent increase in consumer prices a year ago.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the September inflation fell within the regulator’s forecast range of 1.8 percent to 2.6 percent for the month.
“The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation is expected to remain benign over the policy horizon with the balance of risks tilting 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 message to reporters.
“Nonetheless, the significant monetary policy easing and liquidity-enhancing measures undertaken by the BSP and the timely implementation of fiscal measures in the Bayanihan 2 Act are seen to provide sufficient support to economic recovery in the coming months,” he said.
Diokno said indications of gradual improvements in manufacturing and external demand as quarantine protocols were further relaxed here and abroad could bolster consumer sentiments.
“The BSP will continue to evaluate the transmission of BSP’s policy actions to the economy along with the recently approved fiscal measures to address the economic costs of the public health crisis. 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,” Diokno said.
ING Bank Manila senior economist Nicholas Mapa said the anemic demand during the pandemic and the appreciation of the peso—currently one of the strongest currencies in the region—helped limit prices increases in September.
“The peso continues to outperform Asian peers, logging a 4.78 percent gain year-to-date, which has helped limit imported inflation for most of the year. With the economy in recession, consumer demand remains anemic as unemployment stays elevated at around 10 percent as of the first half of the year,” Mapa said.
Mapa said the BSP might not react with a policy adjustment in the near term. He said inflation would likely settle at 2.4 percent in 2020 and help preserve the purchasing power of Filipinos consumers given the economic recession.
The PSA said the heavily-weighted food and non-alcoholic beverages indices eased at an annual rate of 1.5 percent in September, compared to 1.8 percent in August. Slower price increases were also noted in alcoholic beverages and tobacco, clothing and footwear and furnishing, household equipment and routine maintenance of the house.