By Luisa Maria Jacinta C. Jocson, A reporter
HEADLINE INFLATION rose in November, as prices of vegetables, meat and fish rose due to typhoons, the Philippine Statistics Authority (PSA) said on Thursday.
The consumer price index (CPI) rose to 2.5% year-on-year in November from 2.3% in October but was down from 4.1% in the same month last year.
Inflation resolved within the Bangko Sentral ng Pilipinas’ (BSP) 2.2%-3% forecast for the month.
The November print also matched the average produced by a BusinessWorld a survey of 15 analysts conducted last week.
Headline inflation averaged 3.2% over the 11-month period, significantly higher than the BSP’s first full-year forecast of 3.1%.
“The recent drop in inflation is consistent with the BSP’s assessment that inflation will continue to move closer to the lower end of the target range in the near term,” the central bank said in a statement.
Inflation, which excludes volatile food and fuel prices, eased to 2.5% in November from 2.4% the previous month. Inflation reached 3% in the January-November period.
The main source of CPI acceleration this month is the food and non-alcoholic beverage index, said National Statistician Claire Dennis S. Mapa. The weighted index accelerated to 3.4% in November from 2.9% in October.
Food inflation at the national level increased to 3.5% in November from 3% in the previous month. This was mainly caused by vegetables, tubers, plantains, cooking bananas and pulses, which increased to 5.9% in November, a reversal from a 9.2% contraction in October and a 2% decrease last year.
Mr. Mapa said this is mainly due to the storms that hit the country this month.
“Almost all but a few items under the vegetable group have seen price increases,” he said in mixed English and Filipino.
For example, he mentioned the price of tomatoes, which increased to 37.2% in November from 47.9% last month.
In November, the country saw six typhoons enter the Area of Responsibility, according to the state weather bureau.
Agricultural damages due to typhoons Nika, Ofel and Pepito reached P785.68 million, according to the latest report of the Department of Agriculture (DA).
The increase in inflation was seen in fish and other seafood (0.4% from 0.4% a month earlier) and meat and other parts of slaughtered animals (3.9% from 3.6%).
PRICES OF RICE
“Yes, the good news is that the rate of inflation in rice is decreasing,” said Mr.
Rice inflation eased to 5.1% in November from 9.6% last month. However, staple grains still played a major role in inflation during the month, accounting for 17.7% or 0.4 percent of overall inflation.
“The trend from January to November keeps going down. There are factors here, such as basic results, but the retail prices per kilogram of regular, well-milled and special milled rice are also decreasing,” said Mr Mapa.
PSA data showed that the average price of milled rice decreased to P49.24 per kilo in November from P50.22 in October; milled rice decreased to P54.64 from P55.22; and special rice decreased to P63.72 from P63.97.
“What we expect in December is the decrease in rice production, which is good news for our homes. The inflation of the bottom 30% has also decreased because the weight of rice is important to them,” he added.
Rice prices continued to fall after the executive order that reduced the tax on rice exports to 15% went into effect in July.
Agriculture Secretary Francisco P. Tiu Laurel, Jr. he said they are working to reduce the price of rice, especially with the newly launched Rice-for-All program, which was distributed in local markets on Thursday.
The plan aims to provide rice at P40 per kilo.
“If international rice prices continue to moderate, the peso remains stable, and taxes remain low, we will likely see the price of well-milled rice drop significantly in the coming months,” the DA official said in a statement.
Meanwhile, transport inflation eased slightly to -1.2% from 2.1% in October but increased from 0.8% last year.
In November, the pump price adjustment stood at a total of P1.70 per liter of gasoline, P3.20 per liter of diesel and P1.60 per liter of kerosene.
Mr. Mapa also noted the impact of the depreciation of the peso on imported goods such as fuel.
“That is dangerous because that has an impact on our goods, especially fuel… that is an impact, because we buy it in US dollars,” he said.
The peso fell to the P59-per-dollar level twice during the month, hitting record lows on November 21 and 26.
Data from the PSA showed inflation for households in the top 30 percent of income fell to 2.9 percent in November from 3.4 percent last month and 4.9 percent a year ago.
In the 11 months to November, inflation in the bottom 30% reached 4.3%.
In the National Capital Region (NCR), inflation eased to 2.2% from 1.4% last month while inflation in non-NCR regions stood at 2.6%.
National Economic and Development Authority Secretary Arsenio M. Balisacan said consumer prices remained “stable” despite the shock of the bad weather.
“We are committed to maintaining price stability by ensuring inflation remains low and manageable. This will be supported by prudent fiscal policies and strategic trade measures in the near term, as well as improved access to quality employment opportunities and productivity-enhancing reforms in the medium term,” he said.
Inflation in December will also remain at the target level, said Mr. Balisacan.
“We are well on track to keep inflation within our year-round target despite some challenges, such as consecutive strong typhoons that have affected the agricultural sector,” added Treasury Secretary Ralph G. Recto.
RISKS OF CONTINUITY
However, the BSP reiterated that the balance of risks in the outlook for 2025 and 2026 has shifted to the upside.
“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.
On the latest inflation note, the BSP said it will “continue to maintain a moderate approach in its easing cycle to ensure price stability consistent with sustainable economic growth and employment.”
Analysts also said that the inflation should be strengthened well in the coming months.
“Looking ahead, inflation will remain firmly within the BSP’s target of 2-4%. “Major risks remain, however, including adverse weather conditions, regional tensions, higher-than-expected wage increases, and rising energy prices,” Chinabank Research said in a note.
Pantheon Macroeconomics Economics Emerging Asia director Miguel Chanco said inflation is likely to be 3.2% this year and 2.4% in 2025.
The outlook for inflation will help the BSP continue to ease policy rates, analysts said.
“Furthermore, we expect the BSP to ease policy by another 25 basis points (bps) by the end of this month, as inflation remains comfortably within the 2-to-4% target range.” Mr. Chanco said.
The Monetary Board is scheduled to hold its final policy meeting of the year on December 19.
BSP governor Eli M. Remolona, Jr. said the Monetary Board could choose to pause its tapering cycle or deliver another 25-bp rate cut later this month.
Inflationary pressures will prompt them to keep prices steady but weak economic growth could cause them to fall, he said.
This year, the BSP delivered a rate cut of 50 bps on top of the 25-bp rate cut in its August and October policy reviews.
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