THE retail goods prices in the National Capital Region (NCR) rose 0.8% year-on-year in August, following a 3.1% increase a year earlier, the Philippine Statistics Authority (PSA) reported Thursday.
Year-to-date, the general retail price index (GRPI) rose 1.2%.
On a month-on-month basis, August GRPI rose 0.1%, the same increase recorded in July.
Food registered a 1.2% increase, much less than the 3.7% increase in the same month last year.
Chemicals, including vegetable oils and fats, rose 0.9%, while machinery and transport equipment rose 0.4%. In the same month last year, these commodities rose 0.9% and 1%, respectively.
The highest increase was in crude materials, inedible except fuels, which rose 4.1%. This is the only commodity that grew faster than its year-earlier rate. In August 2018 prices here grew 1.8%.
Meanwhile, mineral fuels, lubricants and related materials fell 4%, declining for a third month. The commodity rose 19.1% in the same month last year.
Beverages and tobacco rose 2.2% after rising 11.5% a year earlier.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort said that the easing of retail prices in the region reflects the easing of overall inflation.
“The latest easing in Metro Manila retail prices largely correlates with the easing of the overall headline inflation, especially the lower prices of food especially rice, oil petroleum products, and the stronger peso exchange rate,” he said in a e-mail.
He also noted the higher year-earlier base slowed price growth.
Headline inflation was 1.7% year-on-year in August.
The more muted increase in retail prices compared to headline inflation, Mr. Ricafort said, may be due to increased competition among retailers.
This competition, he said, “would have reduced the pass-on costs/inflation to consumers, as producers may have to absorb higher costs when inflation was higher… with less pass-on to consumers on the retail level, thereby leading to much slower prices increases/inflation at the retail level,” he said.
Mr. Ricafort said improved supply may have also caused the “relatively benign” retail inflation.
Security Bank Corp. chief economist Robert Dan J. Roces said that the year-to-date GRPI increase for NCR in August reflects solid consumer demand.
“Year-to-date GRPI growth of 1.2% shows that the retail trade sector is alive and well (due) to positive sentiment of household consumers owing to slower inflation. Retailing accounts for almost a fourth of the services sector making it a major growth driver,” he said.
“With improved macroeconomic fundamentals and favorable consumption base, we expect this to remain positive alongside the expected expansion of the economy in the fourth quarter of this year and well into 2020.”
Mr. Ricafort said that easing inflation in retail products benefits consumers, whose spending accounts for about 70% of the economy.
“This would help sustain consumer spending’s resilient growth as seen in recent quarters and, in turn, would put consumer spending a better position to further add to its huge contribution to the overall economy, thereby leading to faster GDP growth (from a 4-year low of 5.5% in 2Q 2019), going forward.” — Jenina P. Ibañez
