By Luisa Maria Jacinta C. Jocson, A reporter
HEADLINE INFLATION rose to 2.3% in October amid higher food prices, especially rice, the Philippine Statistics Authority (PSA) reported on Tuesday.
Last month’s consumer price index (CPI) was faster than 1.9% in September but down from 4.9% last year.
The October print was within the Bangko Sentral ng Pilipinas’ (BSP) forecast of 2%-2.8% for the month but slightly below the average of 2.4% BusinessWorld a survey of 11 analysts last week.
Inflation reached 3.3%. fThe first 10 months, within the BSP’s target of 2-4%, which gives the BSP more room to continue its tapering cycle.
The BSP expects inflation to reach 3.1% for the year.
“The Monetary Board will maintain a balanced approach to the easing cycle to ensure price stability to promote sustainable economic growth and employment,” said the BSP in a statement.
Core inflation, which excludes volatile food and fuel prices, was steady at 2.4% in October. Inflation reached 3.1% in the January-October period.
The weighted food and non-alcoholic beverage index was the main source of rapid inflation during the month, said National Statistician Claire Dennis S. Mapa.
The index rose to 2.9% in October from 1.4% the previous month but was down from 7% a year ago. It also had a 95.4% share in the uptrend infaverage and about half (46.9%) of the totalfrate of money in October.
Cereals and grain products, including rice, increased to 7.5% in October from 4.9% in the previous month but decreased from 10.8% in October 2023.
Rice in halffit increased to 9.6% in October from 5.7% in the previous month. Basic grains contributed 30.8% or 0.7 percentage point (ppt) to inflation during the month.
Mr. Mapa said the basic results are increasing the price of rice every year. The price of rice was introduced last year.
However, he noted that despite the pickup inflation of rice, the price of the essential commodity has been decreasing month by month amid the recent tax reduction on rice sales.
PSA data showed that the average price of milled rice decreased to P50.22 per kilo in October from P50.47 in September; milled rice decreased to P55.28 per kilo from P55.51; and special rice decreased to P60.97 per kilo from P64.05.
“The expectation is that it has already reached its peak, this is just a fly. We expect that it will decrease again, the rate of inflation and the price level per kilo in the coming months,” said Mr.
The order of the council reduced the tariffs on rice sales at 15% from 35% until 2028 took iefcomplete in July.
“The slight increase in the inflation rate for October was mainly due to temporary factors, such as weather disturbances such as Severe Tropical Storm Kristine and Super Typhoon Leon,” said Treasury Secretary Ralph G. Recto.
The latest data from the Department of Agriculture showed that agricultural damage due to Tropical Storm Kristine stands at P6.2 billion, equivalent to 283,528 metric tons (MT) of capacity loss.
Vegetables, pulses, plantains, cooking bananas and pulses index eased slightly to 9.2% in October from a contraction of 15.8% in September.
“We have seen prices, especially certain things, for example, talong (eggplant) had a double-digit increase. Expected to be this November, maybe fin the first two weeks, we will still see the prices of vegetables increase. “Usually we see that after a typhoon, but that is normal after,” said Mr.
Slower annual inflation was also seen in fish and other seafood (-0.4% in October from 1.2% in September).
“Another contributing factor to vehicle growth was a slight year-on-year decline of 2.1% during the month from a 2.4% year-on-year decline in September 2024,” PSA said.
In October, the pump price adjustment stood at P2.80 per liter of gasoline, P4.60 per liter of diesel, and P3.25 per liter of kerosene.
Other major commodity groups that contributed to overall inflation but posted lower monthly inflation rates were housing, water, electricity, gas and other (2.4% from 3.3%) and restaurants and lodging (3.9%) from 4.1%).
Meanwhile, the infThe number of households in the bottom 30 percent rose to 3.4% in October from 2.5% in September but fell from 5.3% last year.
In the 10 months to October,fthe bottom 30% rate reached 4.5%.
In the National Capital Region (NCR), inflation decreased to 1.4% from 4.9% last year. Meanwhile, inflation in areas outside the NCR fell to 2.6% from 4.9% last year.
ADDITIONAL TO ONE
Meanwhile, the BSP said it expects inflation to remain within the target of 2-4% in the coming quarters.
“The recent inflation is in line with the BSP’s current assessmentfthe trend will continue to trend closer to the lower end of the target range in the following quarters. This shows a reduction in supply pressure for essential food items, especially rice,” the central bank said.
The Secretary of the National Economic and Development Authority (NEDA) Arsenio M. Balisacan also said that the government is on track to keep inflation at the set level.
“The government is fully committed to ensuring price stability and protecting Filipino families from unnecessary shocks,” he said.
Mr. Recto said rice prices should continue to moderate in the coming months amid the influx of cheap imported rice.
“Furthermore, the DoF (Department of Finance) is seeing a drop in rice prices in the international market, following the lifting of India’s export ban announced in late September,” he added.
However, the central bank warned that the balance of risks in the inflation outlook has shifted to a rise next year and 2026.
“Higher downside risks may come from potential adjustments in electricity rates and higher minimum wages in areas outside Metro Manila, while negative factors continue to be linked to the impact of lower import taxes on rice,” he said.
SIMPLIFYING THE ROUND
With inflation expected to remain at target levels in the near term, the central bank could continue its easing cycle, analysts said.
“Although inflation has increased, we expect it to stay within the BSP’s target for the next 12 months, we don’t think there will be any major shocks,” said Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr.
“Looking ahead, bad weather continues to be a major risk to food supply and prices, although favorable results, lower rice tariffs, and mild price pressures in other commodity groups should help keep inflation within target,” Chinabank Research said. report.
It said the Monetary Board has room to further reduce borrowing costs at its December 19 meeting.
“We continue to see the possibility of lowering the BSP rate in December given the favorable inflation situation. However, external developments may affect the BSP’s decision,” said Mr. Neri.
He cited risks to this view, such as the devaluation of the peso, the rate-cutting cycle of the US Federal Reserve, and the US presidential election.
Since August, the Monetary Board has cut interest rates by 50 basis points (bps) this year, bringing the key rate to 6%.
BSP Governor Eli M. Remolona, Jr. hinted at the possibility of a 25-bp rate cut in December. This would bring the benchmark to 5.75% by the end of 2024.
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