Inflation rate accelerated to a five-month high of 3.4 percent in September from 3.1 percent in August, led by higher food prices, the National Economic and Development Authority said Thursday.
The September figure was also faster than 2.3 percent recorded a year ago. This brought the average inflation in the first nine months to 3.1 percent, slightly higher than the mid-point of the target range of 2 percent to 4 percent for 2017.
This was also within the Bangko Sentral ng Pilipinas’ forecast of 2.8 percent to 3.6 percent for the month. Core inflation, which excludes volatile food and energy prices, also increased to 3.3 percent from 3 percent in August.
“We are still positive that inflation for full year 2017 will settle within the government’s target of 2 to 4 percent. However, we still face several risks to inflation such as higher domestic fuel prices, weaker peso, and minimum wage hike that will be effective today in the National Capital Region,” Economic Planning Secretary Ernesto Pernia said in a statement.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the inflation environment would continue to be manageable over the policy horizon after taking into account the latest assessment of price levels in September.
“Inflation is projected to settle with the national government’s target range of 2 to 4 percent in 2017 to 2019. Firm domestic economic activity, sufficient liquidity and well-anchored inflation expectations continue to support current policy settings,” Espenilla said.
Data from the Philippine Statistics Authority showed that food inflation in September increased slightly to 3.6 percent from the previous month’s 3.5 percent. Faster price increases were recorded for corn, fish, vegetables, cereals, flour, bread, pasta, and oils and fats.
Higher annual increments in other commodity groups were also recorded, such as alcoholic beverages and tobacco, 6.4 percent; clothing and footwear, 2 percent; housing, water, electricity, gas and other fuels, 3.8 percent; transport, 4.8 percent; and restaurant and miscellaneous goods and services, 2.4 percent.
Pernia said the accelerated adjustments in food, particularly corn, fish and vegetables, could be partly traced to the lingering effects of typhoon Jolina and tropical depression Maring, which caused damage to agriculture and fisheries in the Calabarzon region, particularly Quezon province.
Total reported losses from tropical depression Maring were estimated to have reached P77 million.
“We must continue to strengthen the resiliency of communities not only to support low-income farmers but also to stabilize prices of agricultural commodities,” Pernia said.
He said that this could be done through programs on increasing access to technology, improving access of agriculture products to trade partners, and upgrading credit programs to include crop insurance so farmers are able to recover from losses.
Meanwhile, non-food inflation reached 3.1 percent, its highest since February 2013. This is due to faster year-on-year price adjustments in housing, water, electricity, gas and other fuels, transport, restaurants, and clothing and footwear.
ING Bank Manila senior economist Joey Cuyegkeng said the impact of weather disturbances was worse than expected and drove higher food prices. He said price pressures from non-alcoholic beverages were also a surprise.
“As a result of the upside surprise, we have raised our 2017 average inflation forecast to 3.2 percent, which is in line with BSP’s forecast. The risk remains on the upside, in our view. We have retained our 3.5 percent inflation forecast for 2018 and 2019,” Cuyegkeng said.
Cuyegkeng said the upside inflation surprise could lead BSP to be more cautious if inflation reports for October and November remained on an uptrend.
DBS Bank of Singapore, however, said inflation was unlikely to go anywhere near 4 percent, or the ceiling of the official target range of 2 percent to 4 percent for the year.