Inflation, or the rate at which the average price of selected goods and services increases over a period of time, slowed down further in August to a near three-year low.
The Philippine Statistics Authority said August inflation decelerated further to 1.7 percent last month from 2.4 percent in July and 6.4 percent in August last year. Last month’s level is the lowest inflation since October 2016 when the rate was 1.8 percent.
PSA said the slowdown was mainly “due to the slower annual increase in the index of the heavily-weighted food and non-alcoholic beverages at 0.6 percent.”
Other commodity groups that posted slower annual rates during the month are housing, water, electricity, gas, and other fuels; health; recreation and culture; and, restaurant and miscellaneous goods and services.
PSA also said the transport index, which dropped by 0.2 percent, also contributed to the downtrend of inflation this month.
Higher annual increments were noted in the indices of alcoholic beverages and tobacco; clothing and footwear; and education.
Excluding selected food and energy items, core inflation eased further to 2.9 percent in August from 3.2 percent July and 4.8 percent in August last year.
Inflation now averages 3 percent which is at the midpoint of the government’s full-year target range of between 2 and 4 percent.
The August level is also within the monthly forecast range of the Bangko Sentral ng Pilipinas.
“The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation will continue to decelerate in the third quarter of this year and pick up slightly in the fourth quarter,” BSP Gov. Benjamin Diokno said.
Diokno said BSP continues to expect average inflation to firmly settle within the target range as “ample domestic food supply conditions along with lower global oil prices have contrib1uted to a manageable inflation environment.”
“Deepening trade tensions between China and the US along with ongoing geopolitical risks have raised global economic uncertainty which poses a downside risk to the inflation outlook,” Diokno said.
He said the BSP will continue to keep a close watch over latest economic developments here and abroad to “ensure that the monetary policy stance remains consistent with the BSP’s price stability objective while being supportive of economic growth.”
Decelerating inflation allowed the Monetary Board to cut rates twice, totaling 50 basis points, to buffer the economy from external forces like the US-China trade war.
Inflation in NCR continued to move at a slower pace during the month at 1.4 percent.
Inflation in areas outside NCR also eased further to 1.8 percent.
PSA noted that Region IX (Zamboanga Peninsula) exhibited the lowest inflation of 0.5 percent in August 2019, while MIMAROPA Region still registered the highest inflation at 4.6 percent.
Meanwhile, the National Economic and Development Authority expects the Rice Liberalization Act to further bring down the price of rice.
In a statement, NEDA said rice deflation was also observed for the fourth consecutive month, reaching -5.2 percent in August 2019 from -2.9 percent in July.
“The Rice Liberalization Act (RLA) continues to help increase rice supply in the country. This allows more Filipinos to access cheaper rice. This is especially helpful since a large number of families spends almost 30 percent of their total food expenditure on rice,” NEDA Undersecretary for Policy and Planning and currently Officer-in-Charge (OIC) Rosemarie Edillon said.
Domestic retail and wholesale price of rice is now lower compared to the price levels last year, down by 10-13 percent year-on-year or around P4.20-5.20 per kilo. This is due to the higher inventory, increasing by 31.9 percent in July 2019.
Malacanang welcomed the continued downward trend in inflation saying this is positive proof that macroenomic policies and measures government put in place are sound and resilient in curbing soaring prices.