By means of Beatriz Marie D. Cruz, Reporter
INFLATIONN DELAYED, as expected, to a seven-month low in August due to a moderate rise in food prices and a drop in transportation costs, prompting calls for the Philippine central bank to make more interest rate cuts next quarter to boost economic growth.
Consumer prices rose 3.3%, compared with 4.4% in July and 5.3% a year earlier, the Philippine Statistical Authority (PSA) said Thursday.
The increase was within the Bangko Sentral ng Pilipinas (BSP) 3.2-4% forecast for the month and below the 3.7% average estimate of 15 analysts in a Business world poll from last week.
Descending insideFThis could justify further policy easing, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an email.
“It is possible for indoorsFto maintain the 3% level for the remainder of 2024,” he said. “That could justify further rate cuts from the BSP, which would match any future Federal Reserve rate cuts from 2024 to 2026.”
The Monetary Board cut interest rates by 25 basis points (bps) to 6.25% at its August 15 meeting. FThe first cut in almost four years. BSP Governor Eli M. Remolona Jr. has announced another 25 basis point cut before the year ends.
In a note, Pantheon Macroeconomics said inflation risks “remain on the downside as the recent cut in rice rates has not yet had a meaningful impact on prices.”
But Chinabank Research noted that while rice prices could fall in the coming months, the recent bad weather poses supply-side risks that could push up food prices.
“Base effects will help reduce inflation in September, which could help offset potential upward price pressures from the typhoon and monsoon rains,” the report said.
August ended six straight months of acceleration, with inFreturn to the Philippine central bank’s 2-4% target.
Month on month, consumer prices fell by 1.1%. If seasonal factors are not taken into account, prices fell by 0.1%.
Core in itFInflation, which excludes volatile food and fuel prices, fell to 2.6% from 2.9% in July and to 2.6% a year ago. Inflation averaged 3.6% in the first eight months of the year.
At a news briefing, national statistician Claire Dennis S. Mapa said inflation in August was mainly driven by slower price increases in food and non-alcoholic beverages, which slowed to 3.9% from 6.4% in July.
It accounted for 69.9% of the total inFdownward trend.
The transport sector also contributed to the downward trend, with an annual decline of 0.2%. In August, adjustments to pump prices amounted to a net decrease of P2.70 per liter for gasoline, P2.80 for diesel and P3.70 for kerosene.
Eat insideFGrowth slowed to 4.2% from 6.7% in July, mainly due to slower rice price growth to 14.7%. This was followed by vegetables, tubers, plantains, cooking bananas and legumes with a year-on-year decline of 4.3%.
The average price of a kilo of plain milled rice fell to P50.66 in August from P50.90 a month earlier, while the price of well-milled rice fell to P55.56 from P55.85, PSA data showed.
MONITORING OF RISKS
The PSA also reported a faster annual decline in the indices of fish and other seafood by 3.1%, and of sugar, confectionery and desserts by 3.8%.
Lower insideF2.4% were also recorded for flour, bread and other bakery products, pasta products and other grains; meat and other parts of slaughtered land animals at 4%; and prepared foods and other food products not elsewhere classifiedFat 5.5%.
On the other side, insideFRates for housing, water, electricity, gas and other fuels accelerated from 2.3% in July to 3.8% in August, mainly due to higher electricity prices.
“Our expectation is that this will increase until October,” Mr Mapa said.
In a statement, Treasury Secretary Ralph G. Recto said the government “will not be complacent” with the latest inflation figures. “Although we are now seeing the positive results of our measures, we are proactively monitoring the possibilitiesFlationary risks to address them in a timely and targeted manner.”
The government is prepared to counter the effects of La Niña in IndiaFNational Economic and Development Authority Secretary Arsenio M. Balisacan said this in a separate statement.
These include improved early warning systems and the use of communication systems to warn of dam openings, as well as measures against the possible spread of livestock diseases, he added.
President Ferdinand R. Marcos, Jr. vowd to set up more state-backed farm-to-market outlets and accelerate the rollout of pig vaccines to tame rising costs. In a statement, he attributed the slowing inflation to lower rice tariffs.
Mr. Marcos said placing more stores under the state’s Kadiwa program, which allows farmers to sell directly to consumers, in the central and southern Philippines will keep prices low.Ffordable.
There were 265 regular Kadiwa stores and 119 Kadiwa pop-up stores nationwide that will operate for a limited time from May.
Mr. Marcos said the government would begin the controlled rollout of African swine fever vaccines to ensure safetyfficant and aFfordable offering of pork.
The president also said the government is doing everything it can to ensure stable gasoline prices.
The Philippines was lashed by heavy rains this week due to severe tropical storm Yagi and the southwest monsoon, with the Department of Agriculture estimating damage to farms at P350.85 million. The agency said production losses amounted to 14,814 tonnes across 8,893 hectares of land. Rice was responsible for P333.08 million of the total damage. — of Kyle Aristophere T. Atienza