MANILA, Philippines (Update 2, 10:51 a.m.) — Consumer price growth continued its downtrend in September to post the slowest rate in three years on the back of lower food prices and utility costs, the Philippine Statistics Authority reported Friday.

Inflation eased to 0.9% in September, slower than 1.7% registered in August and 6.7% recorded a year ago.

The latest reading was the slowest rate since April 2016, or when inflation stood at 0.7%. Year-to-date, inflation averaged 2.8% — settling within the government’s 2%-4% annual target.

According to the PSA, softer price increments in food and drinks — which are heavily-weighted items in the basket of goods and services used to compute inflation — primarily contributed to the downtrend last month.

Prices of rice — a Filipino main staple — fell for the fifth straight month in September by 8.9%. This was the biggest decline since 1995 and a reversal from 10.4% spike last year amid the influx of cheap rice from abroad, National Statistician Dennis Mapa told a press conference.

Prices of corn, a popular rice substitute, also dropped in September, Mapa added.

Meanwhile, costs of energy-related items — particularly those for transport, housing and utilities — likewise declined despite the recent volatility in oil prices.

‘Hit bottom’

Euben Paracuelles, an economist at Nomura, said inflation “likely hit bottom” in September.

“We believe September should mark the low for inflation and expect it to start gradually picking up from here, in part as base effects become less favourable,” Paracuelles said, adding that inflation will likely pick up above 2% in December.

The Bangko Sentral ng Pilipinas — whose primary mandate is to maintain price stability — announced last week a new round of reduction in banks’ reserve and policy rate amid benign inflation and concerns about economic growth.

BSP Governor Benjamin Diokno had said it was logical for the central bank to dial back the 175-basis point cumulative rate hikes fired off in 2018, which saw inflation peak at a nine-year high in September and October.

“This spectacular fall in inflation is not due to one institution or policy action alone. It is ‘whole of government’ effort,” Diokno said of the latest inflation data.