By Luisa Maria Jacinta C. Jocson, Reporter
HEADLINE INFLATION picked as much as 2.3% in October amid higher food prices, particularly rice, the Philippine Statistics Authority (PSA) reported on Tuesday.
Last month’s consumer price index (CPI) was faster than 1.9% in September but slower than 4.9% a 12 months ago.
The October print was inside the Bangko Sentral ng Pilipinas’ (BSP) 2%-2.8% forecast for the month but barely below the two.4% median estimate in a BusinessWorld poll of 11 analysts last week.
Headline inflation averaged 3.3% within the first 10 months, inside the BSP’s 2-4% goal, giving the BSP more room to proceed its easing cycle.
The BSP expects inflation to average 3.1% for the complete 12 months.
“The Monetary Board will maintain a measured approach in its easing cycle to make sure price stability conducive to sustainable economic growth and employment,” the BSP said in a press release.
Core inflation, which excludes volatile prices of food and fuel, was regular at 2.4% in October. Core inflation averaged 3.1% within the January-October period.
The heavily weighted food and nonalcoholic beverages index was the fundamental source of faster inflation throughout the month, National Statistician Claire Dennis S. Mapa said.
The index accelerated to 2.9% in October from 1.4% a month ago but eased from 7% a 12 months earlier. It also accounted for a 95.4% share within the uptrend in inflation and nearly half (46.9%) to the general inflation rate in October.
Cereals and cereal products, which include rice, spiked to 7.5% in October from 4.9% a month prior but eased from 10.8% in October 2023.
Rice inflation jumped to 9.6% in October from 5.7% a month ago. The staple grain contributed 30.8% or 0.7 percentage point (ppt) to inflation throughout the month.
Mr. Mapa said base effects drove up rice inflation 12 months on 12 months. A price ceiling on rice was implemented last 12 months.
Nonetheless, he noted that despite the pickup in rice inflation, the worth of the important thing commodity has been declining on a month-on-month basis amid the recent tariff cut on rice imports.
PSA data showed that the common price of standard milled rice dropped to P50.22 per kilo in October from P50.47 in September; well-milled rice declined 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 peaked already, that is only a blip. We expect that it’ll go down again, the inflation rate and price level per kilo in the approaching months,” Mr. Mapa said.
The chief order that slashed tariffs on rice imports to fifteen% from 35% until 2028 took effect in July.
“The slight uptick in our October inflation rate was mainly attributable to temporary aspects, resembling weather disturbances like Severe Tropical Storm Kristine and Super Typhoon Leon,” Finance Secretary Ralph G. Recto said.
Latest data from the Agriculture department showed that agricultural damage as a result of Severe Tropical Storm Kristine stood at P6.2 billion, akin to 283,528 metric tons (MT) of volume loss.
The vegetables, tubers, plantains, cooking bananas and pulses index saw a slower decline to 9.2% in October from the 15.8% contraction in September.
“We saw prices, especially specific items, for instance, talong (eggplant) had a double-digit increase. The expectation is that this November, perhaps the first two weeks, we’ll still see rising vegetable prices. Normally we see that after a typhoon, but that normalizes after,” Mr. Mapa said.
Slower annual inflation was also seen for fish and other seafood (-0.4% in October from -1.2% in September).
“Also contributing to the uptrend was transport with a slower year-on-year decrease of two.1% throughout the month from a 2.4% annual drop in September 2024,” the PSA said.
For October, pump price adjustments stood at a net increase of P2.80 per liter for gasoline, P4.60 per liter for diesel, and P3.25 per liter for kerosene.
Other major commodity groups that contributed to overall inflation but posted lower inflation rates on a month-on-month basis were the housing, water, electricity, gas and other fuels index (2.4% from 3.3%) and restaurants and accommodation services (3.9% from 4.1%).
Meanwhile, the inflation for the underside 30% of income households quickened to three.4% in October from 2.5% in September but slowed from 5.3% last 12 months.
Within the 10 months to October, inflation for the underside 30% averaged 4.5%.
Within the National Capital Region (NCR), inflation eased to 1.4% from 4.9% a 12 months earlier. Meanwhile, inflation in areas outside NCR slowed to 2.6% from 4.9% a 12 months ago.
FURTHER DOWNTREND
Meanwhile, the BSP said it expects inflation to stay inside the 2-4% goal in the approaching quarters.
“The most recent inflation outturn is consistent with the BSP’s assessment that inflation will proceed to trend closer to the low end of the goal range over the succeeding quarters. This reflects easing supply pressures for key food items, particularly rice,” the central bank said.
National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan likewise said the federal government is on course to keeping inflation inside goal.
“The federal government is fully committed to making sure price stability and protecting Filipino households from undue shocks,” he said.
Mr. Recto said rice prices should proceed to ease further in the approaching months amid the entry of cheaper rice imports.
“Furthermore, the DoF (Department of Finance) is seeing a decline in rice prices within the international market, following the lifting of the export ban of India announced in late September,” he added.
Nonetheless, the central bank warned that the balance of risks to the inflation outlook has shifted to the upside for next 12 months and 2026.
“Upside risks to the inflation outlook could emanate from the potential adjustments in electricity rates and better minimum wages in areas outside Metro Manila, while downside aspects proceed to be linked to the impact of lower import tariffs on rice,” it said.
EASING CYCLE
With inflation expected to stay inside goal within the near term, the central bank can proceed on its easing cycle, analysts said.
“While inflation has gone up, we expect it to stay inside the goal of the BSP in the following 12 months, assuming no major supply shocks,” Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said.
“Looking ahead, opposed weather continues to pose a big risk to food supply and costs, though favorable base effects, lower rice tariffs, and benign price pressures in other commodity groups should help keep overall inflation firmly inside goal,” Chinabank Research said in a report.
It said the Monetary Board has room to proceed reducing borrowing costs at its Dec. 19 meeting.
“We proceed to see the opportunity of a BSP rate cut in December given the favorable outlook for inflation. Nonetheless, external developments may affect the BSP’s decision,” Mr. Neri said.
He cited risks to this outlook, resembling the peso depreciation, the US Federal Reserve’s own rate-cutting cycle, and the US presidential elections.
Since August, the Monetary Board has lowered rates of interest by 50 basis points (bps) this 12 months, bringing the important thing rate to six%.
BSP Governor Eli M. Remolona, Jr. has signaled a possible 25-bp rate cut in December. This might bring the benchmark to five.75% by end-2024.
