Factory gate prices continue to ease

MANILA, Philippines — Factory gate prices continue to ease in September as producer prices in nine commodity groups contracted, the Philippine Statistics Authority (PSA) said.

The PSA said the Producer Price Index (PPI) for manufacturing contracted at a slower rate of 0.2 percent in September from the revised 0.8 percent decline in August and 0.5 percent contraction in September 2017.

This was attributed to the decline in the indices of nine major commodity groups, with non-metallic mineral products posting the highest decline of 11.6 percent.

Other sectors that registered contractions were: food manufacturing, transport equipment, rubber and plastic products, chemical products, fabricated metal products, furniture and fixtures, wood and wood products and leather products.

On the other hand, the indices for tobacco products accelerated by 51.8 percent in September.

Upticks were also seen in the indices of 10 other commodity groups: petroleum products, electrical machinery, beverages, basic metals, miscellaneous manufactures, paper and paper products, machinery except electrical, textiles, printing, footwear and wearing apparel.

Several think tanks and economic research groups expect the growth in the prices of goods and services to have either reached its peak in the third quarter of the year or to sustain growth and peak in the fourth quarter.

Inflation, however, is widely expected to start tapering off in the middle part of next year as monetary action via policy rate hikes and non-tariff measures meant to boost food production are expected to take effect.

The September Purchasing Managers’ Index (PMI) for manufacturing have stated that Philippine manufacturers continue to feel cost inflation brought about by shortages in the supply of raw materials such as steel, electronic and electrical components, plastics, paper, sugar and fuel.

Manufacturing conditions, however, improved because of stronger domestic demand and improved operating conditions.