Inflation accelerates at 4.9% in August

After a slight deceleration in July, inflation or the rate of increase in the prices of goods and services accelerated in August due to the faster movement in the prices of food commodities, the Philippine Statistics Authority (PSA) reported Tuesday.

At a virtual press briefing, PSA chief and National Statistician Claire Dennis Mapa reported that inflation last month clocked in at 4.9%, the highest since January 2019.

This is faster than the 4.0% inflation rate recorded in July. 

Last month’s inflation print settled at the upper end of the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 4.2% to 4.9%. 

August’s figures brought the year-to-date average at 4.4%, still above the government’s target ceiling of 2% to 4%.

“Ang dahilan ng mabilis na antas ng inflation nitong Agosto 2021 ay ang mas mabilis na paggalaw ng presyo ng Food and Non-Alcoholic Beverages na may 6.5% inflation at 77.4% share sa pagtaas ng pangkalahatang inflation sa bansa,” Mapa said. 

(The faster inflation in August 2021 is due to the accelerated movement in the price of Food and Non-Alcoholic Beverages which has 6.5% inflation and 77.4% to the overall acceleration of inflation in the country.)

“Ang mga pangkat ng pagkain na pangunahing nag-ambag sa inflation ng Food and Non-Alcoholic Beverages ay ang mga karne, gaya ng baboy, 16.4% inflation; isda, tulad ng galunggong, 12.4% inflation; at gulay, partikular ang talong, 15.7% inflation,” he added.

(The food groups which contributed mostly to the Food and Non-Alcoholic Beverages inflation are meat, such as pork with 16.4% inflation; fish, such as galunggong, at 12.4%; and vegetables, particularly eggplant at 15.7% inflation.)

Faster movement in food prices

The PSA chief said the faster movement in food prices was mainly due to supply issues.

In particular, Mapa the faster increase in fish prices was due to supply constraints probably amid the closed fishing season.

For vegetable prices, Mapa said the faster increase of double-digit was due to weather conditions and mobility restrictions which increased the transportation of moving the products from place to place.

Meanwhile, meat inflation, particularly pork, remains elevated amid the lingering presence of the African Swine Fever which affects the local hog population.

Annual hikes were also higher in the indices of the following food groups:

• Corn, 6.6%
• Other cereals, flour, cereal preparation, bread,  pasta and other bakery products, 1.8%
• Fish, 12.4%
• Oils and fats, 6.1%
• Vegetables, 13.5%
• Sugar, jam, honey, chocolate and confectionery, 1.4%

Inflation for fruit inched up to 0.1%, from an annual drop of -0.6% in July.

The annual decline of -0.4% in the rice index in August was slower relative to its previous month’s annual decrease of -1.0%.

Meanwhile, the milk, cheese and egg index retained its previous month’s annual growth of 0.6%.

The PSA also reported that annual increases were  higher in the indices of the following commodity groups:

• Alcoholic beverages and tobacco, 10.3%
• Clothing and footwear, 1.8%
• Housing, water, electricity, gas, and other fuels, 3.1%
• Furnishing, household equipment and routine household maintenance, 2.5%
• Transport, 7.2%
• Restaurant and miscellaneous goods and services, 3.8%

Moreover, the recreation and culture index went up by 0.5% in August 2021, after recording annual decreases since August 2020.

The other commodity groups such as health, communication, and education, retained their previous month’s annual growth rates.

Inflation in NCR, outside Metro Manila

Inflation in the National Capital Region (NCR) followed the national trend as it accelerated to 3.7% in August from 3.2% in July.

The main drivers for the faster NCR inflation print are as follows:

Food and non-alcoholic beverages, 6.6%

• Alcoholic beverages and tobacco, 10.6%
• Housing, water, electricity, gas, and other fuels, 1.9%
• Furnishings, household equipment and routine household maintenance, 1.4%
• Health, 2.7%
• Restaurant and miscellaneous goods and services, 3.2%

The rest of the commodity groups either had slower annual increments or retained their previous month’s annual growth rates, according to the PSA.

Areas outside NCR (AONCR) also followed the national level’s trend as inflation in the area quickened to 5.2% last month from 4.3% in July.

Same as the national trend, the uptrend in the inflation in AONCR was mainly due to the higher annual hike in food and non-alcoholic beverages index at 6.5%.

Contributing also to the uptrend in the inflation in the area were the higher annual increments registered in alcoholic beverages and tobacco, at 10.2%; clothing and footwear, 2.1%; housing, water, electricity, gas, and other fuels, 3.7%; furnishing, household equipment and routine maintenance of the house, 2.8%; transport, 8.4%; and restaurant and miscellaneous goods and services, 4.1%.

All regions in AONCR, except MIMAROPA and Caraga, had higher inflation in August 2021.

The highest inflation during the month remained in Region II (Cagayan Valley) at 7.5%, while the lowest was still registered in Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) at 2.5%.

Inflation for bottom 30%

The country’s inflation felt by the bottom 30% income households accelerated at 5.2% in August from 4.4% in July, due to the annual uptick of the heavily-weighted Food and Non-Alcoholic Beverages index at 5.6% from 4.1% in the prior month.

Annual increases were also recorded in the indices of alcoholic beverages and tobacco, 11.1%; housing, water, electricity, gas and other fuels, 3.2%; health, 2.8%; and education, 1.9%.

Annual increments were also higher in the indices of the following food groups during the month:

• Corn, 6.6%
• Other cereals, flour, cereal preparation, bread,  pasta and other bakery products, 1.8%
• Fish, 12.4%
• Oils and fats, 6.1%
• Vegetables, 13.5%
• Sugar, jam, honey, chocolate and confectionery, 1.4%

In addition, the PSA chief said annual declines in the indices of rice and other food products during the month were smaller at -0.5% and -0.7%, respectively, compared with their corresponding annual decreases in the previous month at -0.6% and -0.8%.

Annual increases were slower in the indices of meat at 17.4%, and fruits at 3.9%; while the index of milk, cheese and egg moved at its previous month’s annual rate of 1.8%.

Consistent with BSP assessment

BSP Governor Benjamin Diokno said the latest inflation figures in August were consistent with the central bank’s assessment that “inflation could settle close to the high end of the target range in the near term before decelerating back to within the target range by year end.”

“In 2022 to 2023, inflation will likely fall towards the midpoint of the target, supported by the continued and timely implementation of non-monetary measures and reforms to address directly supply-side pressures on key food items,” Diokno said.

The risks to the inflation outlook remain broadly balanced over the policy horizon, the BSP chief said.

“The uptick in international commodity prices due to supply-chain bottlenecks and the recovery in global demand could lend upside pressures on inflation,” he said.

“Meanwhile, the emergence of new coronavirus variants, leading to stricter lockdown measures and delayed reopening of the economy, is seen to pose downside risks to both aggregate demand and inflation,” he added.

Moving forward, the central bank chief noted that the BSP stands ready to maintain its accommodative monetary stance for as long as necessary to support the economy’s sustained recovery to the extent that the inflation outlook would allow. — RSJ, GMA News