Inflation eases slightly in August

MANILA, Philippines — Inflation dipped slightly in August after being on an uptrend for five months, as transport and food prices recorded slower increases, the Philippine Statistics Authority (PSA) said.

In a briefing yesterday, national statistician Dennis Mapa said  headline inflation – the rate of increase in prices of goods and services – was at 6.3 percent in August. This was  slower than the 6.4 percent in July, but faster than the 4.4 percent in August last year.

The August headline inflation rate is within the 5.9 to 6.7 percent forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

For the January to August period, inflation averaged 4.9 percent, higher than the BSP’s two to four percent target range.

Core inflation, which excludes food and energy items with high volatility, was at 4.6 percent in August, up from 3.9 percent in July, and  2.8 percent in August 2021.

Mapa attributed the slight easing in inflation to the slower increase in transport costs, at 14.6 percent in August from the previous month’s 18.1 percent.

Contributing to the slowdown in transport costs were gasoline and diesel prices.

Mapa said food and non-alcoholic beverages also contributed to the slight easing in inflation as the index declined to 6.3 percent in August from 6.9 percent in July.

Items that contributed to the slower inflation in the food and non-alcoholic beverage index were fish, meat and vegetables.

The information and communication index also saw lower growth of 0.4 percent in August from 0.5 percent in July.

While inflation eased slightly in August, Mapa said it is not clear if the deceleration would continue.

“I cannot really say if it is going down or it reached the peak because out of the 13 commodity groups, nine actually increased. Only three commodity groups decreased,” he said.

Commodity groups with higher inflation rates in August were alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; furnishings, household equipment and routine household maintenance; health; recreation, sports and culture; education services; restaurants and accommodation services; and personal care, and miscellaneous goods and services.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said inflation could still peak in  October at below seven percent, while the average for the year could be at a little over five percent.

“Second-round inflationary effects after higher minimum wages and higher minimum transport fares since June to July 2022 could still lead to higher prices of other goods and services, such as higher prices of sugar and other affected products,” he said.

He  said petitions for higher minimum transport fares could lead to additional inflationary pressures for the coming months.

ING Bank Manila senior economist Nicholas Mapa said the acceleration of core inflation in August showed second-round effects and demand-side pressures are present.

“Above-target core inflation suggests that price pressures are here to stay, with inflation likely peaking in November at seven percent should the transport fare adjustment take place,” he said.

To help ease the impact of global inflationary pressures and protect the purchasing power of Filipinos, Socioeconomic Planning Secretary Arsenio Balisacan said the government is implementing subsidy programs and interventions.

“It is our top priority to ensure that Filipino households have sufficient and healthy food on their table, especially the poorer sector of the society. We will continue implementing programs that reduce transport and logistics costs to bring inflation down and to protect the purchasing power of our consumers. Most importantly, it is imperative to transform Philippine agriculture into a dynamic and productive sector to speed up our recovery and significantly reduce poverty in the country,” he said.

Among the programs being implemented by the government is to provide fuel discounts to farmers and fisherfolk to ease the impact of higher fuel prices.

As of Aug. 17, a total of 131,145 accounts for target beneficiaries have been created nationwide, of which 120,827 accounts  were already loaded with fuel discounts, and 42,084 cards had already been distributed to corn farmers and fisherfolk nationwide.

In addition, the government is offering free rides for passengers of the EDSA Bus Carousel until yearend.

To boost domestic supply of agricultural products, the government will continue to provide support in the form of lower input costs, innovation in farming, financial assistance, and improvements in the value chain.