Inflation quickens to 2.5% in November

By Luisa Maria Jacinta C. Jocson, Reporter

HEADLINE INFLATION quickened in November, as prices of vegetables, meat and fish rose due to a series of typhoons, the Philippine Statistics Authority (PSA) said on Thursday.

The consumer price index (CPI) picked up to 2.5% year on year in November from 2.3% in October but was slower than 4.1% in the same month a year ago.

Inflation settled within the Bangko Sentral ng Pilipinas’ (BSP) 2.2%-3% forecast for the month.

The November print also matched the median estimate yielded in a BusinessWorld poll of 15 analysts conducted last week.

Headline inflation averaged 3.2% in the 11-month period, a tad higher than BSP’s 3.1% full-year baseline forecast.

“The latest inflation outturn is consistent with the BSP’s assessment that inflation will continue to trend closer to the low end of the target range in the near term,” the central bank said in a statement.

Core inflation, which excludes volatile prices of food and fuel, inched up to 2.5% in November from 2.4% a month ago. Core inflation averaged 3% in the January-November period.

The main source of acceleration of the CPI for the month was the food and nonalcoholic beverages index, National Statistician Claire Dennis S. Mapa said. The heavily weighted index quickened to 3.4% in November from 2.9% in October. 

Food inflation at the national level accelerated to 3.5% in November from 3% a month earlier. This was largely due to vegetables, tubers, plantains, cooking bananas and pulses, which jumped to 5.9% in November, a turnaround from the 9.2% contraction in October and 2% decline a year ago.

Mr. Mapa said this was largely due to the string of typhoons that hit the country during the month.

“Almost all except for a few items under the vegetable group saw a spike in prices,” he said in mixed English and Filipino.

For example, he cited prices of tomatoes, which soared to 37.2% in November from -47.9% a month ago.

In November, the country saw six typhoons entering its Area of Responsibility, according to the state weather bureau.

Agricultural damage due to tropical cyclones Nika, Ofel and Pepito reached P785.68 million, according to the latest bulletin by the Department of Agriculture (DA).

An uptick in annual inflation was also seen for fish and other seafood (0.4% from -0.4% a month earlier) and meat and other parts of slaughtered land animals (3.9% from 3.6%).

RICE PRICES
“Of course, the good news is the inflation rate of rice is declining,” Mr. Mapa said.

Rice inflation slowed to 5.1% in November from 9.6% a month ago. However, the staple grain was still the top contributor to inflation during the month, accounting for 17.7% or 0.4 percentage point of overall inflation.

“The trend from January to November, it’s been declining. There are factors here, like base effects, but the retail prices per kilogram for regular milled, well-milled and special rice are also declining,” Mr. Mapa said.

PSA data showed that the average price of regular milled rice dropped to P49.24 per kilo in November from P50.22 in October; well-milled rice fell to P54.64 from P55.22; and special rice declined to P63.72 from P63.97.

“Our expectation for December is for rice inflation to slow further, which is good news for our households. The inflation for the bottom 30% also slowed because the weight of rice is significant for them,” he added.

Rice prices have been on the decline after the executive order which slashed tariffs on rice imports to 15% took effect in July.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. said they are working to further bring down rice prices, especially with the recently launched Rice-for-All program, which was rolled out to local markets on Thursday.

The program aims to provide rice at P40 per kilogram.

“If international rice prices continue to ease, the peso remains stable, and tariffs stay low, we would most likely see the price of well-milled rice decline further in the coming months,” the DA chief said in a statement.

Meanwhile, transport inflation posted a slower decline to -1.2% from -2.1% in October but picked up from -0.8% a year ago.

In November, pump price adjustments stood at a net increase of P1.70 a liter for gasoline, P3.20 a liter for diesel and P1.60 a liter for kerosene.

Mr. Mapa also noted the impact of the peso depreciation on imported goods such as fuel.

“That’s a risk because that factors in our commodity items, particularly fuel… that’s the impact, because we buy it in terms of US dollars,” he said.

The peso fell to the P59-per-dollar level twice during the month, hitting the record low on Nov. 21 and 26.

Data from the PSA showed the inflation for the bottom 30% of income households eased to 2.9% in November from 3.4% in the previous month and 4.9% a year ago.

In the 11 months to November, inflation for the bottom 30% averaged 4.3%.

In the National Capital Region (NCR), inflation quickened to 2.2% from 1.4% a month prior while inflation in areas outside NCR was steady at 2.6%.

National Economic and Development Authority Secretary Arsenio M. Balisacan said that consumer prices have still remained “relatively stable” despite the shock from inclement weather.

“We are committed to maintaining price stability by ensuring inflation remains low and manageable. This will be supported by prudent monetary policies and strategic trade measures in the near term, as well as improved access to quality job opportunities and productivity-enhancing reforms in the medium term,” he said.

December inflation will also likely remain within target, Mr. Balisacan added.

“We are very much on track to keep our inflation within our target band for the entire year despite some challenges, such as strong successive typhoons that affected the agriculture sector,” Finance Secretary Ralph G. Recto added.

RISKS TO UPSIDE
However, the BSP reiterated that the balance of risks to the outlook for 2025 and 2026 have shifted to the upside.

“Upside risks to the inflation outlook could emanate from the potential adjustments in electricity rates and higher minimum wages in areas outside Metro Manila, while downside factors continue to be linked to the impact of lower import tariffs on rice,” it said.

With the latest inflation print, the BSP said it will “continue to maintain a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment.”

Analysts likewise said that inflation should be well-anchored in the months to come.

“Looking ahead, inflation will likely remain firmly within the BSP’s 2-4% target. Key upside risks persist, however, including adverse weather, geopolitical tensions, higher-than-expected wage hikes, and upward adjustments in electricity rates,” Chinabank Research said in a note.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said headline inflation will likely average 3.2% this year and 2.4% in 2025.

The inflation outlook will help the BSP further ease policy rates, analysts said.

“Moreover, we expect the BSP to ease policy by a further 25 basis points (bps) later this month, with inflation still comfortably within its 2-to-4% target range.” Mr. Chanco said.

The Monetary Board is set to have its final policy-setting meeting for the year on Dec. 19.

BSP Governor Eli M. Remolona, Jr. said that the Monetary Board could opt to pause its easing cycle or deliver another 25-bp rate cut later this month.

Inflationary pressures would prompt them to keep rates steady but weak economic growth could cause them to cut, he said.

This year, the BSP has delivered a total of 50 bps worth of rate cuts in increments of 25-bp reductions at its August and October policy reviews.