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Inflation accelerated to 14-year high of 7.7% in October 2022 —PSA

Inflation continued its uptrend in October, hitting a 14-year high amid the consistent rise in food, utilities and transport costs, the Philippine Statistics Authority (PSA) reported on Friday.

Inflation — the rate of increase in the prices of consumer goods and services — accelerated to 7.7% from 6.9% in September, PSA chief and National Statistician Claire Dennis Mapa said at a press conference.

The October 2022 inflation was also faster than the 4% rate recorded in October 2021.

The 7.7% inflation print last month was the highest in 14 years, when inflation clocked in at 7.8% in December 2008 at the height of the global financial crisis.

October’s inflation also settled within the upper band of the Bangko Sentral ng Pilipinas’ forecast range of 7.1% to 7.9%.

The year-to-date average inflation settled at 5.4%, within the Marcos administration’s assumption of 4.5% to 5.5% for the entire 2022.

“Ang dahilan ng mas mataas na antas ng inflation nitong Oktubre 2022 kaysa noong nakaraang buwan ay ang mas mabilis na pagtaas ng presyo ng Food and Non-Alcoholic Beverages. Ito ay may 9.4% inflation at 80.9% share sa pagtaas ng pangkalahatang inflation sa bansa,” Mapa said.

(The cause of the higher inflation rate in October 2022 compared to the prior month was the faster increase in the prices of Food and Non-Alcoholic Beverage. This has a 9.4% inflation and 80.9% share in the increase in the overall inflation in the country.)

Major contributors to the higher inflation for Food and Non-Alcoholic Beverages index were vegetables, tubers, and cooking bananas, etc. with 16% inflation in October from 3.5% in September.

Also contributing to the rise of Food and Non-Alcoholic Beverage index were meat and other parts of slaughtered animal and sugar, confectionery, and deserts with respective inflation prints of 11.5% (from 9%) and 34.4% (from 30.2%).

The second commodity group that contributed to the acceleration of October inflation was the Restaurants and Accommodation services index with 5.7% inflation from 4.6% in September and 11.3% share in the overall uptrend.

“Ito ay dahil sa mas mataas na presyo ng restaurants, cafes, and the like na may 5.8% inflation mula sa 4.7% inflation noong Setyembre 2022,” Mapa said.

(This is due to higher prices in restaurants, cafes, and the like with 5.8% inflation from 4.7% inflation in September 2022.)

The third commodity group that contributed to faster inflation in October was the Housing, Water, Electricity, Gas and Other Fuels index with 7.4% inflation from 7.3% and 2.3% share to the overall increase in last month’s inflation.

In particular, Mapa said inflation for electricity quickened to 23.6% from 21.4%, rents also grew to 3.6% from 3.5%, and wood fuel rose to 5.9% from 3.9%. 

Higher increment was also observed in the Transport index with 12.5% inflation as fares for public passenger transport booked an 11.6% inflation from 8.5% in the prior month.

Meanwhile, major transport fuels such as diesel and gasoline also saw a slowdown to 54.4% from 74.2% and 15% from 27.7%, respectively. 

The hike in public transportation fares took effect on October 3, which was approved by the Land Transportation Franchising and Regulatory Board (LTFRB).

The fare increase will cover most forms of land transportation, as the agency recognized the need given the continuous increase in petroleum prices.

Meanwhile, President Ferdinand "Bongbong" Marcos Jr. has ordered the continuation of support for the most vulnerable sectors in the form of cash transfers and fuel discounts to help them amid the impact of the rising inflation.

The Office of the Press Secretary said the administration is committed to support farmers and other stakeholders in agriculture in post-disaster recovery, while improving the value chain and investing in climate-smart technologies.

“The President has also directed concerned agencies to invest in innovations and technologies to make our communities and businesses resilient amid extreme weather challenges,” OPS officer-in-charge Cheloy Garafil said in a statement.

“We assure the public that the government continues to monitor inflation and all contributing factors, and will explore all other measures to alleviate its impact on our people,” she added.

External pressures, typhoon

In a separate statement, the National Economic and Development Authority (NEDA) said the surge in consumer prices “resulted from external price pressures, like the Russia-Ukraine war and lockdowns imposed in parts of China, which disrupted global supply chains, and the lingering aftermath of recent typhoons, including Typhoon Karding that hit the country in late September.”

Mapa echoed NEDA, saying that the rise in food inflation, which caused the overall inflation to accelerate, was “really the effect of the previous Typhoon Karding.”

The typhoon affected 108,594 farmers and fisherfolk, with a combined volume of production loss of 158.117 metric tons (MT), covering rice, corn, cassava, abaca, high value crops, livestock and poultry, and fisheries.

Karding’s damage and losses to agriculture sector amounted to P3.12 billion. The weather disturbance damaged damaged 170,762 hectares of farm lands in the Cordillera Administrative Region (CAR), the Ilocos Region, Cagayan Valley, Central Luzon, Calabarzon, the Bicol Region, and Western Visayas.

“Our immediate priority is to continue supporting the most vulnerable sectors of the economy, hence, the cash transfers and fuel discounts will continue. This will alleviate the effects of the sustained increase in commodity prices as a result of global headwinds as well as the recent typhoons which damaged our domestic production and disrupted food supply,” said NEDA Secretary Arsenio Balisacan.

“It’s high time that we boost support for the agriculture sector not only in post-disaster recovery, but more importantly through preemptive measures. To sustain productivity and resilience, climate-adaptive agricultural technologies should be put in place and value chains strengthened. In addition, one of the priority legislative measures of the President is the creation of the Department of Water Resources that will oversee the use and supply of water, and mitigate the risks of water-induced disasters,” he added. 

The NEDA chief said the government is closely monitoring the inflation and possible inflation pressures.

“We continue to prioritize and proactively manage these issues by providing immediate assistance and enabling timely imports to augment domestic food production, while building the resilience of families, communities and the economy,” he said.

Raise wages

Bagong Alyansang Makabayan (Bayan) secretary general Renato Reyes said last month's inflation rate “should compel the government to look into the plight of working people struggling to make ends meet.”

“It is now necessary to open discussions about raising wages and salaries for working people and lowering prices of basic commodities. The mantra that the government is powerless amid rising prices and wage erosion is unacceptable. Government is duty-bound to address the worsening economic crisis faced by the people,” he said.

The Bayan secretary general urged President Ferdinand Marcos Jr. to certify as urgent the pending bills that seek to reduce the tax burden on basic commodities.

“Marcos can certify as urgent the pending bills that seek to raise wages and salaries. Our lawmakers should be drafting measures that will alleviate the tremendous economic burden faced by the people. Now is the time to help the working people who are most in need," Reyes said.

Inflation in Metro Manila, outside NCR

Inflation in the National Capital Region (NCR) followed the national trend as inflation in the capital area clocked in at 7.7% from 6.5%.

The acceleration of inflation in Metro Manila was primarily brought about by the higher annual growth in the food and non-alcoholic beverages index at 11.4% from 8.5% in September. The restaurants and accommodation services index, recording 8.6% annual increment, also contributed to the uptrend.

Likewise, inflation in areas outside NCR rose to 7.6% from 7% in the prior month.

The higher inflation in areas outside Metro Manila was due to the acceleration in the annual growth of the food and non-alcoholic beverages index at 9%, from 7.2% in September.

Inflation for bottom 30%

Meanwhile, inflation felt by the bottom 30% income households in the country also continued its uptrend as it further accelerated to 7.3% from 6.7% in September.

This brought the year-to-date inflation for the income group at 4.8%.

Mapa said the higher annual increment in the index of Food and Non-Alcoholic Beverages at 7.5% in October from 6.5% in the previous month, primarily contributed to the higher inflation in the country for the bottom 30% income households.

Also contributing to the acceleration were restaurants and miscellaneous goods and services with 5.5% inflation; and furnishings, household equipment and routine household maintenance with 5.9% inflation.  — with Anna Felicia Bajo/KBK/VBL/RSJ, GMA Integrated News