After two straight months of acceleration, inflation or the rate of increase in the prices of goods and services slowed down in October on the back of slower increases in food prices, the Philippine Statistics Authority (PSA) reported on Tuesday.
At a press briefing in Quezon City, National Statistician and PSA chief Claire Dennis Mapa said inflation rate clocked in at 4.9% last month, a deceleration from the 6.1% rate recorded in September.
October’s inflation print was also lower than the 7.7% rate seen in October 2022.
This is also the slowest rate since the 4.7% inflation seen in July this year.
Last month’s figure was also slower-than-expected as the Bangko Sentral ng Pilipinas’ (BSP) forecast that inflation for October would settle within 5.1% to 5.9%.
Year-to-date inflation rate stood at 6.4%, still above the government’s ceiling of 2% to 4%.
“Ang pangunahing dahilan ng mas mababang antas ng inflation nitong Oktubre 2023 kaysa noong Setyembre 2023 ay ang mas mabagal na pagtaas ng presyo ng Food and Non-Alcoholic Beverages,” Mapa said.
(The main reason for the slower inflation rate in October 2023 versus September 2023 was the slower increase in the prices of Food and Non-Alcoholic Beverages.)
The PSA chief said the Food and Non-Alcoholic Beverages index saw an inflation rate of 7% from 9.7% in the prior month.
The heavily-weighted index also contributed 89.7% to the overall decline.
This as vegetables, tubers, cooking bananas as well as the sub-index of cereals and cereal products such as rice saw lower increments of 11.9% (from 29.6%) and 10.8% (from 14.1%), respectively.
Mapa said the slowdown in inflation during October can also be attributed to “high base effect” as vegetable and rice prices were higher year-on-year.
Food inflation, which tracks price movements in a “basket” of food commonly purchased by households, also slowed down to 7.1% from 10% in September.
Rice inflation, in particular, which saw a 17-year increase in September, also decelerated to 13.2%.
“Rice inflation slowed down following the onset of peak harvest and import arrivals. The stable supply of vegetables as harvest season comes likewise resulted in a slower inflation rate of the commodity," National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said in a statement.
To recall, President Ferdinand Marcos Jr. imposed on September 5 price caps on regular and well-milled rice varieties and lifted it on October 4.
The government has since said that prices of the food staple have been stable following the lifting of the price control measure amid the harvest season and arrival of imports.
Apart from rice, other food items also saw slower increases, namely fish at 5.6% from 6.1%, meat at 0.8% from 1.3%, bread and other cereals at 7.4% from 8.1%.
The second commodity group which contributed to the slowdown in October inflation rate was the Restaurants and Accommodation Services index which saw a rate of 6.3% from 7.1% month-on-month and an overall share to the downtrend of 6.8%.
Mapa said that barring any unforeseen supply shocks, “we are seeing a trend of inflation going down… for the remaining months of 2023.”
“As inflation eases, it is crucial to continue monitoring the prices of commodities, particularly food, transportation, and energy, amid global challenges such as geopolitical uncertainties and El Niño," said Balisacan.
“It is important to ensure that the most vulnerable sectors of the society are protected and provided assistance, especially while food prices remain high and we expect El Niño to affect local and global food production," the NEDA chief said.
According to NEDA Undersecretary Rose Edillon, those provinces that could be less affected by El Niño are those in Mindanao and the Visayas.
Edillon said there is no exact figure yet as to how much the government will allocate for those affected by the phenomenon.
In line with this, the Department of Social Welfare and Development (DSWD) is currently implementing the pilot run of the Food Stamp Program (FSP), which the agency will scale up in mid-2024.
The Economic Development Group (EDG) also recommended extending the reduced tariff rates for Most Favored Nation under EO No. 10 (s. 2022) until the end of 2024, subject to midyear review.
"While we are providing short-term measures to address effects of inflation through subsidies and importation, we also need to address long-standing challenges in agriculture and food supply chain and help our local farmers boost their productivity and resilience through investment in irrigation, flood control, supply chain logistics, and climate change adaptation," Balisacan said. — with Anna Felicia Bajo/RSJ, GMA Integrated News