MANILA – Inflation in October 2016 remained stable at 2.3 percent as in the previous month, according to the National Economic and Development Authority.
“The steady inflation rate in October is due to slower increases in prices of health commodities, and alcoholic beverages and tobacco,” said Socioeconomic Planning Secretary Ernesto M. Pernia.
He added that although domestic demand is anticipated to remain robust, supply conditions, particularly of food, are expected to improve.
“This should help keep commodity prices steady. Rice prices will be kept stable by the timely arrival of rice imports under the government-to-government procurement scheme,” said Pernia.
The steady rate was seen despite food inflation slightly increasing to 3.5 percent in October 2016 from 3.1 percent in the previous month. Also, vegetable prices continued to remain elevated and further inched up in the same period due to limited supply owing to recent weather-related disruptions, particularly typhoons Lawin and Karen.
“But the inflation for January to October 2016 averaged at 1.6 percent, well below the target range of two to four percent set by the government for this year. We expect the inflation for the full year 2016 to settle below the target range but upside risks remain,” the Cabinet official said.
Risks include the possible rally in oil prices, depreciation of the peso against the US dollar, pending petitions for electricity rate increase, and tropical cyclones.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration or PAGASA reported a 65 percent chance of La Nina developing in the fourth quarter of 2016 and can last until February 2017.
“Given the larger possibility of more frequent and stronger rains, the agriculture sector needs to implement adaptation measures to protect the income of farmers and keep food price inflation at bay,” said Pernia.
“We aim to strengthen the agricultural sector though a comprehensive agricultural development program, a major component of the proposed Philippine Development Plan 2017-2022,” he added.
Non-food inflation in October remained at 1.5 percent as mild price increases were registered in majority of non-food indices such as housing, water, electricity, gas and other fuels; transport; communication; education; and restaurant and miscellaneous goods and services.
Core inflation, which excludes selected volatile food and energy prices, likewise remained stable at 2.3 percent in October.