Prices of key consumer items continued to rise in September, the fastest in four years, and the country’s economic managers said it will remain elevated for the rest of this year.
Inflation accelerated to 6.9 percent from 6.3 percent in August 2022 and the highest recorded inflation since October 2018.
Average rate from January to September 2022 now stands at 5.1 percent, breaching the tip of the central bank’s full-year target range of between 2 and 4 percent by more than a percentage point.
Last year, inflation rate was at 4.2 percent.
Dennis Mapa, national statistician and civil registrar general, said the acceleration in the country’s inflation rate “was primarily due to the higher annual growth rate in the index for food and non-alcoholic beverages.”
This was followed by housing, water, electricity, gas and other fuels.
Also contributing to the uptrend were the higher annual increases in the indices of alcoholic beverages and tobacco; clothing and footwear; furnishings, household equipment and routine household maintenance; information and communication; recreation, sport and culture; restaurants and accommodation services; and personal care, and miscellaneous goods and services.
“Lower annual increments were observed in the indices of health, transport and education services,” Mapa said.
Core inflation, which excludes volatile food and energy items, was lower at 4.5 percent from 4.6 percent the previous month. In September 2021, core inflation was at 2.6 percent.
September’s outturn, however, was within the forecast range for the month of Bangko Sentral ng Pilipinas (BSP).
Felipe Medalla, BSP governor, said it is “consistent with the BSP’s assessment of inflation remaining above target over the near term as price pressures broaden and signs of further adverse second-round effects emerge.”
“Upside risks continue to dominate the inflation outlook in the near term. Price pressures could come from the potential impact of higher global non-oil prices, pending petitions for further transport fare hikes, the impact of weather disturbances on prices of food items, as well as the sharp increase in the price of sugar. The impact of a weaker-than-expected global economic recovery continues to be the main downside risk to the outlook. Nevertheless, inflation risks are seen to be broadly balanced in the medium-term as global commodity prices ease going forward,” Medalla said.
Medalla, also the head of the policymaking Monetary Board, said the BSP’s recent policy actions “are intended to bring inflation and inflation expectations back to the target to ensure the balanced and sustainable growth of the economy in the medium term.”
To combat inflation, the Monetary Board, during its latest monetary policy stance meeting, raised the overnight reverse repurchase facility of the BSP again by another half-percentage point to 4.25 percent.
Accordingly, the interest rates on the overnight deposit and lending facilities were raised to 3.75 percent and 4.75 percent, respectively.
This is the fifth consecutive tightening action by the Monetary Board this year. The key rates have been raised by a total of 225 basis points to combat broadening price pressures.
Medalla said BSP is prepared “to take further policy actions to bring inflation toward a target-consistent path over the medium term, consistent with its primary objective to promote price stability.”
“The BSP also continues to urge timely implementation of non-monetary government interventions to mitigate the impact of persistent supply-side pressures on commodity prices. The BSP will continue to carefully monitor and assess pertinent economic developments that could affect the price dynamics and growth prospects of the country,” Medalla said.
Benjamin Diokno, finance secretary, said “inflation is expected to remain elevated for the last quarter of 2022 with the recent fare hike and the impact of typhoon Karding on food supply.”
However, Diokno said inflation is still seen to fall within the 4.5 to 5.5 percent assumption of the Development Budget Coordination Committee for 2022.
“To manage inflation, the continued timely implementation of government measures is crucial in mitigating the impact of persistent supply-side pressures on food and other commodity prices,” Diokno said.
He added the government intensifies its measures to help increase the domestic supply “by ramping up local production, ensuring timely importation of goods, fertilizers, and raw materials, and improving distribution efficiency.”
“The country needs to produce and import the needed commodities. Given regional production and price disparities, it is equally important that these goods are efficiently distributed. The government is already looking at regions where inflation is high and which goods are driving inflation to address any bottlenecks,” Diokno said.
Arsenio Balisacan, socioeconomic planning secretary, noted the government’s commitment “to ensuring sufficient food supply and sustained subsidies to aid Filipinos in accessing affordable goods and services as inflation persists due to domestic and global pressures.”
“This trend is observed in other countries as well, given the same experience of subdued demand or a low base the past year, because of COVID, and the external pressures this year from commodity prices, logistics bottlenecks, weather shocks, and wide swings in the exchange rate against the US dollar. The government’s priority is to make sure that there is sufficient and affordable food supply for every Filipino family,” Balisacan said.
Aside from support to the agriculture sector, which was heavily damaged by Typhoon Karding recently, Balisacan emphasized the need to fast-track the distribution of targeted subsidies for low-income households and public utility drivers.
Mapa said inflation for food at the national level rose to 7.7 percent in September 2022 from 6.5 percent in August 2022.
Faster annual growth rates were also seen in the following food groups: rice, 2.4 percent; corn, 26.2 percent; flour, bread and other bakery products, pasta products and other cereals, 9 percent; fish and other seafood, 9.1 percent; milk, other dairy products and eggs, 7.6 percent; oils and fats, 20.1 percent; sugar, confectionery and desserts, 30.2 percent; and ready-made food and other food products, 6.7 percent.
On the contrary, slower annual growth rates were observed in the indices of meat and other parts of slaughtered land animals at 9 percent, and fruits and nuts at 3.8 percent.
Mapa said inflation in the National Capital Region (NCR) rose to 6.5 percent from 5.7 percent in August 2022, brought about by the higher annual hike in the food and non-alcoholic beverages index.
Also contributing to the uptrend in the inflation in NCR were the higher annual increases in the indices of housing, water, electricity, gas and other fuels; recreation, sport and culture; and restaurants and accommodation services.
Following the trend at the national level and in NCR, inflation in areas outside NCR increased to 7 percent from 6.5 percent in August 2022, primarily due to the higher annual growths in the indices of food and non-alcoholic beverages; housing, water, electricity, gas and other fuels; and restaurants and accommodation services.
Except for Eastern Visayas, all regions in areas outside NCR recorded higher inflation rates in September. Zamboanga Peninsula and Davao Region both had the highest inflation rate of 9.6 percent, while Cagayan Valley and Calabarzon had the lowest inflation rate at 5.9 percent.
