Inflation sizzles to 1.7% in September

MANILA, Philippines, October 9 ------ Consumer prices in September climbed to their highest level in six months, driven by upticks in food and transport costs, according to the Philippine Statistics Authority (PSA). National Statistician Dennis Mapa said in a press conference yesterday that headline inflation, which measures the change in the average cost of goods and services typically bought by Filipinos, quickened to 1.7 percent in September from 1.5 percent in August.

This marked the fastest increase since inflation hit 1.8 percent in March. The September inflation print, however, was slower than the 1.9 percent registered in the same month last year. It also fell within the Bangko Sentral ng Pilipinas (BSP)’s forecast of 1.5 to 2.3 percent for the month of September.

The slightly faster inflation in September was driven mainly by the one percent uptick in transport costs from a 0.3-percent decline in August. Food and non-alcoholic beverages also drove the uptrend in overall inflation as it registered a slightly faster increase of one percent in September from the previous month’s 0.9 percent. Excluding non-alcoholic beverages, food inflation rose at a slightly faster pace of 0.8 percent in September from 0.6 percent in August. This was driven by vegetables, which picked up by 19.4 percent from 10 percent.

Mapa said this is the highest inflation print for vegetables since the 20.1 percent seen in January. “The rains and floods particularly in vegetable-producing areas had an impact in August and September,” Mapa said. According to Mapa, vegetable inflation is expected to remain elevated due to storms.

Rice inflation, meanwhile, eased slightly to 16.9 percent in September from the previous month’s 17 percent. Inflation averaged 1.7 percent from January to September, below the government’s two to four percent target for the year. The BSP believes inflation remains on track to stay within its target range over the medium term even as global risks persist. “Inflation is projected to average below the low-end of the target range in 2025, primarily due to the easing of rice prices in previous months,” the BSP said.

The central bank also said that the overall outlook for inflation is “broadly unchanged,” with inflation expected to settle within the two to four percent target range for 2026 and 2027. Inflation expectations also remain well-anchored. Still, the BSP flagged possible supply-side pressures from higher rice tariffs and rising global food prices, though these may be offset by subdued global oil prices amid a stable production outlook. “Higher electricity rates could be offset by expectations of subdued global oil prices owing to a stable production outlook,” it said.

The BSP noted that while domestic demand “has held firm,” uncertainties stemming from US policies continue to weigh on global trade and investment, which could temper the Philippine economy’s growth outlook. “The Monetary Board will review newly available information and reassess the impact of prior monetary actions in light of evolving economic conditions and their implications for inflation and growth,” the central bank added.

The Department of Economy, Planning and Development (DEPDev) said the latest rice inflation reflected lower farmgate and international prices, amid reduced import arrivals following the rice import ban. For October, Mapa said the transport commodity group could pose upside risks, if fuel prices continue to increase.

Mapa said the transport commodity group, which has been posting negative inflation for six months, registered positive inflation in September. “As we know in the past, when transport increases, after a few months, increases are also seen in other commodity groups,” Mapa said. Oikonomia Advisory & Research Inc. economist Reinielle Matt Erece said the latest inflation result may give room for the central bank to cut rates in their October meeting, and potentially in December to encourage higher demand and faster economic growth. “We expect to see a continued uptrend in inflation as the holiday season approaches, as people have more money and goods and services will be of higher demand,” Erece said.

Special Assistant to the President for Investment and Economic Affairs Frederick Go said “the economic team remains fully committed to safeguarding price stability and sustaining a low-inflation environment through timely interventions.” DEPDev Secretary Arsenio Balisacan said the government is working to ensure stable supply and affordable prices of essential goods. To stabilize food supply and temper price pressures, Balisacan said the country will allow imports of select vegetables such as carrots, onions and broccoli. “The Department of Agriculture will also establish food corridors to minimize supply disruptions. These will feature greenhouses, storage and post-harvest facilities that can strengthen the resilience of our food systems,” Balisacan said.

When it comes to rice, he said the government is looking at long-term policy measures that would ensure fair income for farmers, keep the staple affordable and maintain macroeconomic stability. “What is critical is a calibrated approach that addresses the needs of both farmers and consumers while supporting the economy’s rapid, sustained and inclusive growth,” the DEPDev chief said. Balisacan also emphasized the need to boost the rice sector’s productivity and competitiveness in the long-term so it could adapt to market shifts and climate risks. “This requires addressing constraints from fragmented farmlands, investing in research and modern technologies, improving post-harvest and marketing systems and expanding farmers’ access to credit, insurance and institutional support,” Balisacan said.

Source: philstar.com