MANILA –Inflation accelerated to 1.1 percent in November 2015 from 0.4 percent in the previous month due to an increase in consumer prices of both food and non-food items, according to the National Economic and Development Authority (NEDA).
“The 1.1 percent reported by the Philippine Statistics Authority (PSA) today is well within the Bangko Sentral ng Pilipinas forecast of 0.4-1.2 percent for the period. It also remains lower than the 3.7 percent recorded in November 2014,” said Deputy Director-General Rolando G. Tungpalan who is currently the Officer-in-Charge of NEDA.
Inflation for the food subgroup increased on the back of higher prices of meat, fish, vegetables and corn, which offset the slowdown in prices of heavily-weighted items such as rice, milk, cheese, eggs, and non-alcoholic beverages.
“Higher local demand and the lingering effects of Typhoon Lando accounted for the price increases in meat and vegetables, while ample supply sustained the lower price of rice,” said Tungpalan.
Inflation in non-food items was also observed due to slower decline in the costs of housing, water, electricity, gas, and other fuels.
Prices in electricity, gas and other fuels went up on the back of higher generation and transmission charges in November 2015. Despite the persistent downward movement of global oil prices, local prices of gasoline and liquefied petroleum gas increased, while prices of diesel and kerosene remained relatively lower.
Faster upward adjustments in the prices of transport, furnishings, household equipment and routine maintenance of the house, health, clothing and footwear, and restaurants, miscellaneous goods, and services, were likewise observed.
Core inflation, which excludes prices of energy and unprocessed food, increased to 1.8 percent in November from 1.5 percent in the previous month. For the 11 months of 2015, average core inflation remained stable at 2.0 percent, the same rate as seen in October.
The November 2015 outturn brought the year-to-date headline inflation to 1.4 percent, below the target range of 2.0 to 4.0 percent set by monetary authorities for 2015.
“Despite the uptick in November, average inflation will likely settle below the low-end target for the year. This will largely be influenced by the slump in global petroleum prices, along with other favorable supply-side factors such as the sluggish domestic retail prices of corn, oil and rice,” said Tungpalan.
To manage risks of higher inflation, the NEDA official called for the faster implementation of the Roadmap for Addressing the Impact of El Niño (RAIN) to soften its adverse impact on food prices and utility rates.
“The government should err on the high side in determining food import requirements in anticipation of El Niño to avoid food price spikes, which would be very detrimental to the poor who spend over 60 percent of their budget on food,” he said.
Tungpalan also pointed out the unstable energy situation in Mindanao, given its large dependence on hydropower plants. “There is a need to reinforce measures to expand investments in the rehabilitation program for existing hydropower plants so as to increase their generation capacities,” he said.
“The government should also start preparing for the possible impact of La Nina, which could be a strong one as well. The current drier than normal conditions must be taken advantage of to build flood mitigation infrastructures,” he concluded.
Tungpalan is OIC of NEDA while Economic Planning Secretary Arsenio M. Balisacan is on official business abroad.