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Business

Inflation accelerates to 4-year high at 6.9%

Louella Desiderio - The Philippine Star
Inflation accelerates to 4-year high at 6.9%
Vegetable vendors display their products for sale at the Balintawak Market in Quezon City on Wednesday (October 5, 2022).
STAR / Michael Varcas

MANILA, Philippines — Inflation accelerated to a four-year high in September following faster increases in food prices, the Philippine Statistics Authority (PSA) said.

PSA chief Dennis Mapa said in a briefing yesterday that headline inflation hit 6.9 percent last month, faster than the 6.3 percent pace in August and the 4.2 percent rate in September last year.

He said the last time inflation reached 6.9 percent was in September and October 2018, the height of the rice price surge.

Still, the latest inflation figure falls within the 6.6 to 7.4 percent forecast range of the Bangko Sentral ng Pilipinas (BSP) for the month.

For the nine-month period, inflation averaged 5.1 percent, above the BSP’s two to four percent target for the year.

Mapa attributed the higher inflation rate in September to the faster increments in food and non-alcoholic beverages, whose index rose to 7.4 percent in September from 6.3 percent in August.

Food inflation climbed to 7.7 percent in September from 6.5 percent in August, with vegetables, tubers, cooking bananas and eggplant, fish and other seafood as well as sugar, confectionery and desserts contributing to the increase.

“Food, in particular, is really increasing. And you will notice that in the individual subgroups of food, almost all of these have risen. This is across different regions,” Mapa said.

He said food inflation in the National Capital Region is at a higher 8.8 percent in September, and at 7.5 percent for areas outside the NCR.

“If you look at regional inflation, you will see there are regions wherein food inflation already reached double digits,” he said. These three regions are: Central Visayas (10.4 percent), Zamboanga Peninsula (10.5 percent) and Davao (10.8 percent).

Aside from food, Mapa said another contributor to the higher inflation rate in September is the housing, water, electricity gas and other fuels commodity group which increased to 7.3 percent in September from 6.8 percent in August.

He said restaurants and accommodation services also pushed up the inflation rate in September, as it went up to 4.6 percent in September from 4.2 percent in August.

Given the higher inflation rate in September, the National Economic and Development Authority (NEDA) said the government is committed to ensuring sufficient food supply and providing subsidies to enable access to affordable goods and services.

“The government’s priority is to make sure that there is sufficient and affordable food supply for every Filipino family,” NEDA Secretary Arsenio Balisacan said.

Among the measures being implemented by the government is to provide fuel discounts worth P3,000 to each eligible farmer to alleviate the effects of high fuel prices, as well as P5,000 cash aid amid high prices of agricultural inputs.

For the coming months, Mapa said the PSA expects increases in transport prices following the fare hikes, which can have a spillover effect on food prices.

He also said the depreciation of the peso could also have an effect on food prices as some inputs are being imported.

“The risk of future inflation in the remaining months of October, November, December will really come from food,” he said.

In an email, Asian Institute of Management economist John Paolo Rivera said the inflation rate may not have peaked yet based on data.

“Historically, we experience peak inflation as we approach Christmas due to increased demand. This time, this will be coupled by persistent supply chain constraints and cost-push factors. Unless managed effectively and efficiently from both demand and supply side, inflation may continue to rise,” he said.

ING Bank Manila senior economist Nicholas Mapa likewise said inflation is expected to pick up further next month.

“We expect inflation to edge higher in October and stay above seven percent for at least two more months,” he said, noting the impact of the third tranche of transport fare hikes implemented this month would be felt for at least the next 12 months.

He also said food inflation is seen to remain elevated following supply disruptions caused by the storm.

To ease the effects of the recent Typhoon Karding, the NEDA said the Department of Agriculture is allotting P709 million for the immediate repair of damaged production facilities and seed distribution.

Despite the damage brought by weather disturbances, the NEDA said the government expects the country to have enough supply of rice, chicken, highland vegetables, yellow corn, and white corn throughout the year.

 

INFLATION

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