Inflation continued slowing down, hitting a 20-year low in November, as the growth rates of the heavily-weighted food and non-alcoholic beverages and transportation retreated further.
The Philippine Statistics Authority (PSA) yesterday said the consumer price index was at 4.1 percent in November from 4.9 percent the previous month.
The slowdown, however, was not enough to bring the national average, now at 6.2 percent, closer to the government’s full-year target range of between 2 and 4 percent.
PSA said the downtrend was primarily brought about by the lower year-on-year growth rate of the heavily-weighted food and non-alcoholic beverages at 5.7 percent in November from 7.0 percent in October.
This was followed by transport with 0.8 percent annual decrease from 1.0 percent annual growth in October 2023.
The restaurants and accommodation services index with a slower inflation rate of 5.6 percent in November 2023 from 6.3 percent in the previous month also contributed to the downtrend of the overall inflation.
“Food inflation at the national level decelerated further to 5.8 percent in November 2023 from 7.1 percent in the previous month,” Dennis S. Mapa, national statistician and civil registrar general, said.
He added that the deceleration of food inflation was “primarily influenced by the annual decrease recorded in vegetables, tubers, plantains, cooking bananas and pulses.”
“Also contributing to the downtrend of food inflation were the slower annual increases observed in fish and other seafood and sugar, confectionery and desserts,” Mapa said.
Food contributed 49.3 percent or 2.0 percentage points to the overall inflation in November.
Core inflation, which excludes selected food and energy items, decelerated further to 4.7 percent from 5.3 percent in the previous month. This brings the average core inflation from January to November to 6.8 percent.
Inflation in the National Capital Region (NCR) also decelerated to 4.2 percent from 4.9 percent, while areas outside NCR also decelerated to 4.1 percent from 4.9 percent.
Mapa said all regions outside NCR recorded slower inflation rates during the month relative to their respective October 2023 annual rates, except for Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).
“Among the regions, Region II (Cagayan Valley) still recorded the lowest inflation rate for the second consecutive month at 2.4 percent, while BARMM recorded the highest inflation at 5.9 percent during the month,” Mapa said.
TIGHT STANCE
Eli Remolona, Bangko Sentral ng Pilipinas (BSP) governor, said the November inflation is within the central bank’s forecast range of 4.0 to 4.8 percent.
“The latest inflation outturn is consistent with the BSP’s projections that inflation will likely moderate over the near term due to easing supply-side price pressures and negative base effects,” he said, adding that “the balance of risks to the inflation outlook still leans significantly towards the upside.”
He said key upside risks are associated with the potential impact of higher transport charges, electricity rates and international oil prices, as well as higher-than-expected minimum wage adjustments in areas outside NCR.
Meanwhile, the impact of a weaker-than-expected global recovery as well as government measures to mitigate the effects of El Niño weather conditions could reduce the central forecast.
“Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident. The BSP will continue to monitor inflation expectations and second-round effects and take appropriate action as needed to bring inflation back to the target, in keeping with the BSP’s price stability mandate,” Remolona said.
The Monetary Board, which meets for the last time this year next week, decided to keep the key rates of the BSP during its last meeting as forecasts show inflation, although still above the government’s target, moderated over the policy horizon.
BSP’s Target Reverse Repurchase (RRP) Rate was kept at 6.50 percent. The interest rates on the overnight deposit and lending facilities will still be at 6.0 percent and 7.0 percent, respectively.
Key rates are still at their highest in more than 16 years.
STABLE SUPPLY
The National Economic and Development Authority (NEDA), meanwhile, said the further drop in the inflation rate can be attributed to the “timely implementation of strategies to stabilize food supply amid the anticipated domestic and external headwinds in the coming months.”
“With the right interventions in place, including the proper and timely deployment of trade policy, we are confident that we can effectively manage inflation and prevent unnecessary upticks in prices of goods and commodities to safeguard the purchasing power of Filipino families, especially those from the most vulnerable sectors,” NEDA Secretary Arsenio Balisacan said.
The country’s chief socioeconomic planner added that the government needs to continue monitoring the inflation situation in the face of continued price pressures coming from geopolitical tensions and extreme weather situations, further fueling uncertainty.
“The sharp drop in inflation for the month of November is a testament to the Marcos, Jr. administration’s whole-of-government effort to moderate rising commodity prices while protecting the most vulnerable sectors from its effects,” Department of Finance (DOF) Secretary Benjamin Diokno said.
To help further reduce the upward pressures on the price of rice, President Ferdinand Marcos Jr. issued a directive to implement various measures to ensure the affordability of rice prices and to protect consumers after lifting the price ceiling in October.
Furthermore, intensified investments in flood control infrastructures and post-harvest facilities will stabilize the supply of key agriculture commodities.
These efforts will complement the implementation of the El Niño Mitigation and Adaptation Plan, as well as the expedition of the government’s responses to mitigate the impact of calamities and natural disasters.
To ensure food security amid global threats of El Niño and other natural calamities, trade protectionism by other countries and geopolitical tensions, intensified efforts to increase agricultural productivity will be supplemented by measures to improve importation of what is only necessary.
