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Inflation rate drops to 4-year low of 2.1%

Inflation rate eased to a four-year low of 2.1 percent in August, on cheaper prices of food, electricity and other commodities, the National Statistics Office said Thursday. Data showed the inflation in August slowed from 2.5 percent in July and 3.8 percent in August 2013. It was also the slowest increase in consumer prices since August 2009, when inflation rate dropped to 1.7 percent, the NSO data showed. “Headline inflation remains stable at an average of 2.8 percent from January to August 2013. This is below the low-end target of 3 to 5 percent set by the Development Budget Coordination Committee for the year,” said Economic Planning Secretary Arsenio Balisacan. Balisacan, who is also the director general of the National Economic and Development Authority, said lower inflation was observed in food and petroleum products despite the peso depreciation and weather disturbances during the period. He said despite the adverse effects of typhoon Labuyo and tropical storm Maring, inflation rate for most food items declined on an annual basis.  “Metro Manila, prices of meat and several vegetable items were even lower than in the previous year,” he said. Data showed average prices of vegetables nationwide were cheaper by 2.6 percent from a year ago, while slower price hikes were recorded for meat, fish, fruits and other food products and beverages. Non-food items also recorded slower price increases in August, as a result of cheaper electricity, gas and other fuels and lower inflation in operation of personal transport equipment and transport services. “This reflects the lower generation charge of Manila Electric Co., which is now able to source power strategically from suppliers with lower cost, and the decline of international crude price during the period,” Balisacan said. Bangko Sentral Governor Amando Tetangco Jr. said the inflation turnout in August was within the Bangko Sentral’s forecast range and supported its current assessment of benign inflation.  The Bangko Sentral set an inflation target of 3 percent to 5 percent this year. He said the low inflation gave the Monetary Board flexibility to further adjustments in its policy stance in case geopolitical concerns in the Middle East as well as in the domestic front affected domestic prices in the future. “[The] BSP will continue to closely monitor developments, particularly geopolitical concerns in the Middle East that may impact on the international prices of commodities as well as developments on the domestic front that may raise volatility in domestic prices,” Tetangco said. With Julito G. Rada
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