Philippine inflation drops to a three-year low

PHILIPPINES saw inflation rate last month fell to a three-year low as a result of a recently-enacted measure which capped the prices of rice staple.

On Thursday, the Philippine Statistics Authority (PSA) announced that inflation fell to 1.7 percent in August from the 2.4 percent recorded in July. It was also the lowest figure recorded since it stood at 1.8 percent in October 2016.

The 1.7-percent rate, for the first time in a few years, fell below the government’s 2 percent to 4 percent target range for the year.

Year-to-date, average inflation stands at 3 percent.

The lower inflation was attributed to the slower annual increase in food and non-alcoholic beverages, which declined from 1.9 percent in July to 0.6 percent last month. This was coupled with slower rates from housing, electricity, water, gas and other fuels, health, recreation and culture, and restaurant and other miscellaneous services.

The transportation index, which slipped by 0.2 percent, was also accounted for the downtrend.

Commenting on the latest figure, National Economic and Development Authority Undersecretary for Policy and Planning Rosemarie Edillon said that the Rice Liberalization Act continues to help increase rice supply in the country, thereby allowing for a more affordable price to end-consumers.

“This is especially helpful since a large number of families spends almost 30 percent of their total food expenditure on rice,” she added.

The Rice Liberalization Act, which was passed into law six months ago, aimed to improve food security in the country, strengthen the rice industry, and promote a more competitive domestic rice market.

Meanwhile, the Philippine central bank commented: “The latest inflation outturn is consistent with the BSP (Bangko Sentral ng Pilipinas) prevailing assessment that inflation will continue to decelerate in the third quarter of 2019 and pick up slightly in the fourth quarter.”

“The BSP continues to expect average inflation to firmly settle within the target range of 3.0 percent to 4 percent for 2019 to 2021. Ample domestic food supply conditions along with lower global oil prices have contributed to a manageable inflation environment,” it added.

However, the continuing trade tensions between the United States and China and its lingering effects on other economies were expected to pose a downside risk to the inflation outlook.

The BSP said it will continue to keep a close watch over latest economic developments domestically and abroad to ensure that monetary policy remains consistent with the price stability objective while being supportive of economic growth.