The inflation rate slowed sharply to 4.9 percent in October, as harvests boosted the supply of rice and vegetables in the market and took the steam out of food costs.
October’s rate was down from September’s 6.1 percent, the Philippine Statistics Authority (PSA) said.
The biggest driver of the rise was food, which was up 7.1 percent, but that was almost three percentage points down from the month before, with rice and vegetables slowing the quickest.
“Rice inflation slowed down following the onset of peak harvest and import arrivals,” Economic Planning Secretary Arsenio Balisacan said in a statement.
“The stable supply of vegetables as harvest season comes likewise resulted in a slower inflation rate of the commodity.”
But Balisacan warned that the El Nino weather phenomenon, which was expected to bring below-normal rainfall across the country in the coming months, could be detrimental for crops.
“It is important to ensure that the most vulnerable sectors of the society are protected and provided assistance, especially while… we expect El Nino to affect local and global food production,” he said.
To address this concern, the Department of Social Welfare and Development (DSWD) is carrying out the pilot run of the Food Stamp Program (FSP), which the agency will scale up in mid-2024.
National Statistician and Civil Registrar General Claire Dennis Mapa said the October 2023 inflation rate was also slower than the 7.7 percent recorded a year ago.
“This brings the average in the first 10 months to 6.4 percent,” Mapa said.
Mapa said barring any supply shocks, “inflation would go down further” in the succeeding months.
HSBC economist Aris Dacanay said he expected the central bank to keep rates steady at its next meeting, scheduled for Nov. 16, “but remain hawkish in tone.”
The central bank took off-cycle action last month, raising rates 25 basis points to 6.5 percent, citing expectations for higher inflation.
It has increased rates by 450 basis points since May 2022.
But Finance Secretary Benjamin Diokno said Monday there was “no justification for higher interest rates” given the easing inflation, Bloomberg reported.
The inflation reading will come as welcome news for President Marcos, who saw a double-digit drop in his approval rating in a recent poll, with surging prices the top concern among those surveyed.
Marcos sparked criticism in September when he imposed a temporary price cap on rice, which some economists warned could distort the market and lead to shortages
Last week, the President handed over the role of Agriculture secretary to a fishing tycoon, having held the position for more than a year and failed to rein in commodity prices.
Food inflation at the national level slowed down to 7.1 percent in October 2023 from 10 percent in the previous month. In October 2022, food inflation was higher at 9.8 percent.
Restaurants and accommodation services, with an inflation rate of 6.3 percent during the month from 7.1 percent in September 2023, also contributed to the easing headline inflation.
Slower annual increases were also noted in the indices of furnishings, household equipment and routine household maintenance, 5.3 percent from 5.4 percent; health, 4.0 percent from 4.1 percent; transport, 1.0 percent from 1.2 percent; recreation, sport and culture, 5.0 percent from 5.1 percent; and personal care, and miscellaneous goods and services, 5.3 percent from 5.4 percent.
In contrast, the commodity groups that registered higher inflation rates during the month were clothing and footwear, 4.8 percent from 4.7 percent; housing, water, electricity, gas and other fuels, 2.6 percent from 2.4 percent; and information and communication, 0.8 percent from 0.6 percent.
Core inflation, which excludes selected food and energy items, decelerated further to 5.3 percent in October 2023 from 5.9 percent in the previous month. This brings the average core inflation from January to October 2023 to 7.0 percent. In October 2022, core inflation was at 5.9 percent.
Following the trend at the national level, the inflation rate in the National Capital Region also decelerated to 4.9 percent in October 2023 from 6.1 percent in September 2023. In October 2022, the inflation rate in the area was recorded at 7.7 percent.
Speaker Ferdinand Martin G. Romualdez welcomed the recent drop in the inflation rate and reiterated the commitment of the House of Representatives to support government efforts to strengthen the economy and ensure affordable food for all.
This decline carries tangible benefits in daily life as it eases financial pressure on families nationwide and makes essential goods more affordable and accessible, Romualdez said.
He said that lower inflation also enhances the purchasing power of Filipinos, enabling them to save and invest in vital areas like education and health care, thus contributing to personal development. — With AFP