Inflation rate climbed to a 21-month high of 2.5 percent in November, on higher food and oil prices and weaker peso, the government said Tuesday.
Data from the Philippine Statistics Authority showed inflation rose 0.2 basis points from 2.3 percent in October and 1.4 basis points from 1.1 percent registered in November 2015. It was also the fastest increase in consumer prices since February 2015 when inflation also settled at 2.5 percent.
The National Economic and Development Authority said despite the uptick, inflation rate in the first 11 months averaged 1.7 percent, below the government’s target range of 2 percent to 4 percent.
Neda director-general Ernesto Pernia said international and domestic risks were tilted upward from a possible rally in oil prices, depreciation of the peso against the US dollar and pending petitions for electricity rate increases.
Neda said the higher inflation was led by domestic prices of petrol products, which comprised the bulk of the non-food commodity basket.
Non-food inflation increased also due to the uptick in prices of housing, water, electricity, gas and other fuels (1.3 percent from 0.9 percent) and transport (0.5 percent from 0.2 percent).
Food inflation remained unchanged in November 2016 at 3.5 percent, with rice prices breaking a five-month increasing trend and corn prices continuing a downward trend since August.
“The decrease in rice prices signals the recovery of the rice sector from the devastation of typhoons Karen and Lawin. We must foster technological advances in agriculture to decrease the susceptibility of our crops to natural calamities,” said Pernia.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said inflation in the near-term was expected to remain manageable. He said the inflation trend was consistent with expectation that for 2017-2018, full-year inflation would be within target.
“We continue to watch petitions for transport fare adjustments and global development that may affect domestic inflation dynamics over the policy horizon,” Tetangco said.
Tetangco said monetary authorities would continue to monitor evolving price trends and output conditions to ensure price stability conducive to a balanced and sustainable economic growth.
The subdued inflation and robust domestic economic growth of 7 percent in the first three quarters encouraged Bangko Sentral’s Monetary Board to keep the benchmark interest rates unchanged during the last policy meeting on Nov. 10.
Meanwhile, Neda said the lifting of the Philippines’ quantitative restriction on rice imports by July 2017 was expected to decrease prices of well-milled rice by P7 and farm gate price by P5.
“We must help our rice farmers prepare for this and help them transition to higher value crops as we ensure food security and make basic prices more affordable to the poor,” said Pernia.
“Overall we expect the full year inflation for 2016 to be well within the government’s inflation target band of 2 to 4 percent. The overall balance of risks is tilted on the upside, with supply-side factors as the main contributor to price adjustments,” said Pernia.