Ample food supply, low prices of oil and power keep inflation stable

MANILA, Nov. 6 -- Sufficient food supply and continuous downward price movements in power and fuel, registered inflation at 0.4 percent (%) in October 2015, the same rate as seen in the previous month, according to the National Economic and Development Authority (NEDA).

The Philippine Statistics Authority reported on Thursday that headline inflation rate remained at 0.4 percent in October 2015, well within the Bangko Sentral ng Pilipinas forecast of 0.1 to 0.9 percent for the period. This is also lower than the 3.2 percent recorded in October 2014.

“The current low inflation environment is expected to continue throughout the year. This will largely be due to favorable supply-side factors such as the availability of ample food supply and low international oil prices,” said Economic Planning Secretary Arsenio M. Balisacan.

Inflation for the food subgroup remained stable in October 2015 due to large price declines in bread and cereal, rice, and corn. Balisacan said that these offset the slight price increase in some food items such as meat and vegetables on account of the damage caused by Typhoon Lando which affected supply.

Lower prices in electricity, gas and other fuels continued on the back of lower generation charge in October 2015. Prices of gasoline, kerosene, diesel, and liquefied petroleum gas (LPG) likewise remained relatively lower due to the persistent downward movement of international crude oil prices.

 

Meanwhile, non-food items showed slight price increments as inflation partially increased by 0.2 percent in October 2015.

Core inflation which excludes energy and unprocessed food prices, slightly increased to 1.5 percent from 1.4 percent in September 2015. However, year-to-date core inflation slowed down to 2.0 percent relative to the 2.1 percent average in September.

“This indicates that price adjustments across a broad range of consumer items are relatively stable,” said Balisacan, who is also NEDA Director-General.

While the environment remains favorable for low inflation, Balisacan however, warned of the upside risks of El Niño and its impact on consumer prices.

“Upside risks could come from the stronger and prolonged El Niño’s impact on food prices and also possible increase in utility rates given the pending petitions for power rate adjustments,” he said.

On food prices, Balisacan said that in the short term, it is imperative to continue monitoring drought in agricultural areas. “There is a need to ensure supply adequacy and to intensify local community efforts in areas that are highly vulnerable and exposed to adverse impacts of a prolonged dry spell,” he said.

Balisacan also emphasized that drier weather conditions on account of the El Niño could adversely affect hydro-powered generation plants and raise the cost of electricity particularly in Mindanao.

“It is also important that the on-going power projects that are expected to be delivered between November 2015 and March 2016 will not be delayed. This will ensure that inflationary pressure coming from power shortages is tempered. The government also needs to sustain improvements in the policy environment to enhance private sector commitment to undertake power projects,” he added. (NEDA) . #inflation