Inflation jumps to 2.5% in Nov

MANILA, Philippines – Prices of consumer goods and services rose at a faster 2.5 percent pace in November, the highest in 21 months, on steeper prices of alcoholic beverages, tobacco, housing, utilities and transportation, the Philippine Statistics Authority (PSA) reported yesterday.

The headline inflation last month, which picked up from 2.3 percent in October and 1.1 percent a year ago, remains within the target 2-4 percent range set by the government

Core inflation, which excludes selected food and energy items, also rose to  2.4 percent in November from 2.3 percent in October and 1.8 percent in November 2015.

“The increase in inflation can be attributed to the increase in domestic prices of petrol products, which comprise the bulk of the non-food commodity basket usually purchased by the average Filipino household,” said Socioeconomic Planning Secretary Ernesto Pernia.

The National Economic and Development Authority (NEDA) said non-food inflation increased due to the uptick of prices in all major items such as housing, water, electricity, gas and other fuels (1.3 percent from 0.9 percent), and transport (0.5 percent from 0.2 percent).

On the other hand, food inflation was unchanged in November 2016 at 3.5 percent, with rice prices breaking its five-month uptrend and corn prices continuing its downtrend since August.

“The decrease in rice prices signals the recovery of the rice sector from the devastation of Typhoons Karen and Lawin. We must foster technological advances in agriculture to decrease the susceptibility of our crops to natural calamities,” said Pernia.

Full year inflation, he said, is expected to remain within the government’s inflation target band of two to four percent. Inflationary pressure include a possible rally in oil prices, depreciation of the peso against the dollar, and pending petitions for power rate hikes.

The Bangko Sentral ng Pilipinas (BSP), meanwhile, continues to assess the impact to inflation of pending petitions for fare adjustments as well as global developments.

BSP Governor Amando Tetangco Jr. said inflation last month was slightly above the central bank’s forecast range of 1.6-2.4 percent. 

This was the highest level since February last year when inflation averaged 2.5 percent.

The consumer price index averaged 1.7 percent in the 11 months to November, or below the BSP target of 2- 4 percent between 2016 and 2018.

“While higher than last October and slightly above the upper end of our forecast range for the month, the November figure brings year-to-date average to 1.7 percent, still slightly below the lower bound of the national government target range of two to four percent,” he added.

During the last rate-setting meeting of the central bank, authorities raised the inflation forecast over the next three years. This year’s forecast was raised to 1.8 percent instead of 1.7 percent, three percent instead of 2.9 percent for next year, and 2.9 percent instead of 2.6 percent for 2018.

Authorities took note of the higher inflation outturn for September and October, the rebound in oil prices, the economic slowdown in China, and the continued weakening of the peso against the US dollar due to the impending interest rate hike in the US.

“Nevertheless the trend is consistent with our expectation that for 2017-18, full year inflation would be within target. We continue to watch petitions for transport fare adjustments and global developments that may affect domestic inflation dynamics over the policy horizon,” Tetangco said.