September 05, 2017

MANILA – Prices of food, transport, water, electricity, and gas pushed up inflation in August 2017.

A report from NEDA-attached agency Philippine Statistics Authority states that headline inflation increased to 3.1 percent in August 2017 from 2.8 percent in the previous month.

Core inflation, which excludes select volatile food and energy prices, also rose to 3.0 percent in August, higher than the revised 2.8 percent in July.

This is slightly higher than market expectations of 3.0 percent, but still within government’s target of 2 to 4 percent.

“Inflation is still expected to remain well within government’s target for the year despite accelerating for the second time in a row. Nonetheless, we should continue to closely monitor upside and downside risks,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

Food inflation rose to 3.7 percent in August 2017 from 3.4 percent in July 2017. This is mainly due to faster price increases in vegetables, fish, corn, flour, bread, and other cereals.

“One cause is Typhoon Jolina last month, which affected agriculture in Central Luzon, particularly in Aurora,” Pernia said.

Meanwhile, non-food inflation rose to 2.7 percent from 2.4 in July. This is due to faster price adjustments in transport, housing, recreation and culture, communication, restaurants, water, and electricity and gas.

Higher domestic petrol prices, particularly unleaded gasoline, diesel, kerosene, and liquefied petroleum gas, mainly caused higher inflation in the transport sector.

“The continuing surge in domestic petrol prices, coupled with depreciation in the peso-dollar rate, may exert upward pressures on inflation, leading to increases in the cost of electricity, gas, and other fuels in the near term,” Pernia said.

Externally, the disruption of economic activities in the United States triggered by Hurricane Harvey might also temporarily impact global economic activity, dampen supplies of energy, and push world oil prices up.

“The impact of Hurricane Harvey on U.S. oil production could exert upward pressures on world oil prices and could translate to higher domestic prices of petroleum. Any significant increases in domestic oil prices could push up transport and electricity inflation in the country in the near term,” he said.

Nevertheless, Pernia maintained that this could still be offset by higher domestic productivity in agriculture and stable commodity prices with favorable weather conditions.