PRICE increases are expected to lose momentum until October before a recovery in headline inflation to around the 2% level in December, according to an economic bulletin issued by the Department of Finance (DoF).
“If the MoM (month-on-month) price increase is kept to at most 0.2%, year-on-year price change will continue its decline until October before reverting to the 2% level starting December,” the DoF said in the statement released Friday.
The DoF also noted that core inflation, which strips out volatile items like fuel, is also easing.
“Core inflation eased to 2.9% for the month while the overall CPI (Consumer Price Index) increased by 0.17% month-on-month in August, less than the 0.25% MoM increase in July,” it said.
The Philippine Statistics Authority (PSA) reported on Thursday that August headline inflation slowed to 1.7% in August from 2.4% in July and 6.4% a year earlier.
Last month’s inflation was slightly lower than the 1.8% median estimate in BusinessWorld’s poll of 12 economists late last week. It also was also at the midpoint of a 1.3-2.1% range estimated by the central bank.
In the eight months to August, inflation is averaging 3%, at the midpoint of the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target range for 2019 but still higher than the the central bank’s 2.6% forecast for the entire year.
“The decline in inflation is traced to the lower rate of increase in the prices of both food and non-food items. Rice price, in particular, clocked its largest year-on-year decline of 5.2%,” it said.
Growth in the food index has slowed to as much as 0.3% from July’s 1.7% and 8.2% a year earlier.
Following the release of data, National Economic and Development Authority (NEDA) said the Rice Tarrification Law brought down the domestic retail and wholesale price of rice by 10-13%. The law “continues to help increase [the] rice supply,” NEDA Undersecretary Rosemarie G. Edillon said.
The law allowed more liberal imports of rice by private entities sho had to pay an import tariff of 35% on grain sourced from Southeast Asia. — Beatrice M. Laforga