Inflation rate rose to a five-month high of 1.1 percent in November from 0.4 percent in October, following the increase in consumer prices as an effect of natural calamities, the Philippine Statistics Authority said Friday.
PSA data showed the November inflation was the highest since it fell below the 1-percent mark in July at 0.8 percent. The figure, however, was slower than the 3.7-percent inflation rate in November 2014.
The National Economic and Development Authority said inflation for the food subgroup increased on the back of higher prices of meat, fish, vegetables and corn, which offset the slowdown in prices of heavily-weighted items such as rice, milk, cheese, eggs and non-alcoholic beverages.
“Higher local demand and the lingering effects of typhoon Lando accounted for the price increases in meat and vegetables, while ample supply sustained the lower price of rice,” said Neda deputy director general Rolando Tungpalan.
This pulled down the average inflation rate in the first 11 months to 1.4 percent, below the government’s target range of 2 percent to 4 percent for 2015.
Core inflation, which excludes prices of energy and unprocessed food, also increased to 1.8 percent in November from 1.5 percent in the previous month. Core inflation in the first 11 months averaged 2 percent.
ING Bank lead economist Joey Cuyegkeng said the higher core inflation was due to “higher transport costs, higher prices for miscellaneous items including meal outside the home—indirectly affected by the impact of the weather abnormalities, and more expensive alcoholic beverages and tobacco products and health products.”
“Despite the uptick in November, average inflation will likely settle below the low-end target for the year. This will largely be influenced by the slump in global petroleum prices, along with other favorable supply-side factors such as the sluggish domestic retail prices of corn, oil and rice,” said Tungpalan.
Tungpalan said there were risks to increasing inflation such as the effects of the El Niño dry spell. “The government should err on the high side in determining food import requirements in anticipation of El Niño to avoid food price spikes, which would be very detrimental to the poor who spend over 60 percent of their budget on food,” he said.
Tungpalan said to manage risks of higher inflation, the government should quickly implement the roadmap for addressing the impact of El Niño.
Tungpalan also pointed out the unstable energy situation in Mindanao, given its large dependence on hydropower plants. “There is a need to reinforce measures to expand investments in the rehabilitation program for existing hydropower plants so as to increase their generation capacities,” he said.
“The government should also start preparing for the possible impact of La Niña, which could be a strong one as well. The current drier than normal conditions must be taken advantage of to build flood mitigation infrastructures,” he said.