PH inflation falls to 15-month low at 3.3%

MANILA -- The country’s inflation rate fell in March to its lowest level in 15 months as food prices eased, but the government is working to mitigate possible inflation risks from El Niño in the coming months.

The Philippine Statistics Authority (PSA) on Friday reported that inflation decelerated to 3.3 percent last month, extending a downtrend that began in November last year.

Inflation rate was higher in February 2019 at 3.8 percent and in March 2018 at 4.3 percent.

Last month’s figure brought the year-to-date inflation to 3.8 percent, well within the government’s 2 percent to 4 percent target range for the year.

The PSA said annual rates decelerated in the indices of seven out of 11 commodities, including food and non-alcoholic beverages; alcoholic beverages and tobacco; housing, water, electricity, gas and other fuels; furnishing, household equipment and routine maintenance of the house; health; communication; and restaurant and miscellaneous goods and services.

Food inflation significantly slowed to 3.1 percent in March, as softer price adjustments in fish, rice, vegetables, and other food items were recorded.

Expectations of an increase in the rice supply following the enactment of the rice tariffication law led to lower retail prices of rice. National Economic and Development Authority (NEDA) officer-in-charge, Adoracion Navarro, said the recent enactment of the Rice Tariffication Law, which liberalizes the importation of rice, now leads to the decline in the prices of rice in the domestic market.

Nicholas Mapa, senior economist at ING Bank Manila, said the basket-heavy food index, the bane of inflation in 2018, has continued to help headline inflation stay within target with rice prices “now well-behaved” even before the Rice Tarrification Law kicks in.

He said the national government has been pro-active in securing the all-important grain with the National Food Authority (NFA) boosting palay reserves by 6.045 percent.

With food inflation held in check, Mapa noted overall price stability has been achieved despite the 33-percent year-to-date (YTD) increase in global crude oil prices and the 23-percent YTD rise in diesel prices.

Major contributors to last month’s inflation include food and non-alcoholic beverages which shared 40.6 percent; housing, water, electricity, gas and other fuels, 23.4 percent; and restaurant and miscellaneous goods and services, 14.5 percent.

“With supply chains normalizing, the 2018 inflation pop has faded very quickly with inflation now firmly within target to help solidify expectations for within-target inflation for this year and next,” he added.

Navarro further said that “despite the further easing of headline inflation in March 2019, the government will remain vigilant for risks, such as the El Niño phenomenon, higher rates of electricity and water, and the volatility in global oil prices.”

Navarro said a prolonged dry spell may affect the prices of food and utilities in the short-term

To ensure there are enough interventions that mitigate the adverse effects of El Niño, the inter-agency El Niño Task Force (ENTF), led by NEDA, will be reactivated as recommended by the National Disaster Risk Reduction and Management Council.

The ENTF will revisit the 2015 Roadmap for Addressing the Impacts of El Niño (RAIN), which aims to cushion the impact of El Niño on food and energy security, health, and safety. It will be expanded to include water security among areas of concern.

“We are hoping this (inflation downtrend) will continue,” PSA Assistant Secretary Josie Perez said in a press briefing.

Perez said the possible inflationary effects of El Niño in the coming months will largely depend on the government’s program to control its impacts, particularly on the agricultural sector.

Meanwhile, annual inflation in the National Capital Region decelerated further to 3.2 percent last March from 3.8 percent the previous month.

A lower inflation in Areas Outside NCR (AONCR) at 3.4 percent was also registered during the month from 3.8 percent in February.

All the regions in AONCR had slower annual growths in March 2019, except in the Cordillera region, which retained its previous month’s annual rate of 2.5 percent.

The lowest inflation among the regions in AONCR during the month was recorded in Zamboanga Peninsula at 2 percent; while the highest annual rate remained in Mimaropa (Mindoro, Marinduque, Romblon and Palawan) at 4.8 percent. (PNA)