Factory gate prices decline at softer pace in October

MANILA, Philippines — Factory gate prices declined at a slower pace in October as more industries slash prices as a discounting strategy to stimulate sales, the Philippine Statistics Authority (PSA) said yesterday.

The PSA’s Producers Price Index (PPI) for Total Manufacturing in October contracted by 3.3 percent annually, slower than the 4.2 percent drop in September and tracks the 0.9 percent annual decline in October 2019.

The PSA attributed the sustained contraction to the decline in the factory gate prices of 13 industry groups led by paper and paper products, which saw a slower contraction of 9.9 percent in October from 12.4 percent in September.

On the other hand, seven industry groups led by furniture and fixtures registered positive growth in October, five of which at a faster clip coming off September.

Other industries that registered continued contractions in factory gate prices were transport equipment, petroleum products, electrical machinery, machinery except electrical, rubber and plastic products, chemical products, non-metallic mineral products, basic metals, wood and wood products, miscellaneous manufactures, footwear and wearing apparel, and textiles.

Among those that registered positive growth in producer prices, meanwhile, were food manufacturing, beverages, tobacco, fabricated metal products, printing and leather products.

Month-on-month, the PPI for manufacturing rose marginally by 0.002 percent in October following a marginal contraction of 0.007 percent in September.

The minimal month-on-month growth in factory gate prices was driven by price gains in petroleum products.

On the other hand, the Purchasing Managers’ Index (PMI) for the domestic manufacturing industry indicated that the prices of some products rose marginally in October as firms passed on some of the cost burden to consumers.

Supply chain issues were also evident during the month as seen in the lengthening of delivery times which PMI respondents attributed to supply shortages and transportation restrictions.