As rice prices continued to drop, inflation fell to a 40-month low of 0.9 percent year-on-year in September, the government reported Friday.

Philippine Statistics Authority (PSA) data showed that the rate of increase in prices of basic commodities last month matched the 0.9 percent posted in May 2016.

ADVERTISEMENT

This brought headline inflation to average at 2.8 percent during the first nine months, within the government’s 2 to 4 percent target range.

Inflation hit a more than nine-year high of 6.7 percent in September last year, prompting that the economic team to push for the easing of food importation in order to cushion the impact of domestic supply bottlenecks, especially of rice.

National Statistician and PSA chief Claire Dennis S. Mapa told a press conference that the heavily weighted food and non-alcoholic beverages index pulled down inflation last September, especially as rice prices declined by 8.9 percent year-on-year—the fifth straight month that the Filipino staple food was cheaper than a year ago.

The rice deflation posted last month was the biggest since 1995, Mapa said.

According to Mapa, retail prices of rice went down 18 percent year-on-year as of September, while palay prices declined by almost a third.

In comparison, Mapa noted that rice prices jumped 10.4 percent year-on-year in September last year, then further rose 10.7 percent in October—the peak of rice inflation, before slowing down starting November and declining since May this year.

Besides base effects, the liberalized rice importation since March, which increased local rice supply, also pushed prices downward, Mapa said.

In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia said “we see the Rice Tariffication Law continuing to help pull down overall inflation in the near term as it continues to help improve rice stock inventory of the country,” adding that “this access to cheaper rice is good for Filipino consumers.”

Rice stock inventory increased by 40.3 percent in August due to higher importation of rice, while prices of retail and wholesale rice already fell by 6 to 8 percent or about P3 a kilo since the Rice Tariffication Law’s enactment in March, said Pernia, who heads the state planning agency National Economic and Development Authority (Neda).

ADVERTISEMENT

Pernia, the country’s chief economist, nonetheless acknowledged the adverse impact of Republic Act No. 11203 on the livelihood of Filipino rice farmers.

“While consumers enjoy lower rice prices, we must at the same time protect the Filipino farmers from falling palay prices. The government must fast-track and prioritize programs and projects under the Rice Competitiveness Enhancement Fund to boost production and improve profitability of the Filipino farmers,” Pernia said, referring to the P10-billion yearly allotment to aid affected farm sectors.

Aside from rice, other food items likewise posted lower prices in September, including vegetables (down 4.7 percent year-on-year), corn (down 4.1 percent), and sugar, jam, honey, chocolate and confectionery (also down 4.1 percent)—all faster price decreases compared with the previous month’s.

While fish prices increased, its inflation eased to 1.4 percent from 2.8 percent in August; meanwhile, oils and fats rose 1.2 percent in September, lower than August’s 1.8-percent rise.

Inflation in meat products slowed to 2.4 percent year-on-year and Mapa said the African swine fever had yet to impact on pork prices.

Pernia said the government was also on the lookout for upside risks to inflation that might come from the reported cases of African swine fever in the country and volatility in international oil prices following the attack on Saudi Arabia’s oil fields last month.

But PSA data showed that prices of petroleum and fuels for personal transport equipment further declined by 8.1 percent in September, a faster drop than the 5.2 percent recorded in August.

Subscribe to Inquirer Business Newsletter

Read Next

EDITORS' PICK

MOST READ