October saw a significant slowdown in the Philippines’ inflation rate as harvests increased the availability of rice and vegetables on the market and reduced the price of food.
According to the Philippine Statistics Authority, consumer prices increased 4.9% year over year in October, a significant decrease from September’s 6.1% increase.
Food accounted for the largest portion of the increase, at 7.1 percent, but it was nearly three percentage points lower than the previous month, with rice and vegetables slowing the fastest.
“Rice inflation slowed down following the onset of peak harvest and import arrivals,” Economic Planning Secretary Arsenio Balisacan said in a statement.
“The stable supply of vegetables as harvest season comes likewise resulted in a slower inflation rate of the commodity.”
But Balisacan warned that the El Nino weather phenomenon, which was expected to bring below-normal rainfall across the country in the coming months, could be detrimental for crops.
“It is important to ensure that the most vulnerable sectors of the society are protected and provided assistance, especially while… we expect El Nino to affect local and global food production,” he said.
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At the central bank’s upcoming meeting on November 16, which is slated to take place, HSBC economist Aris Dacanay stated that he anticipated rates to remain unchanged “but remain hawkish in tone”.
The central bank raised interest rates 25 basis points to 6.5 percent last month in an off-cycle move, citing “an elevated inflation path over the policy horizon” as justification.
Since May 2022, rates have grown by 450 basis points.
According to Bloomberg, Finance Secretary Benjamin Diokno stated on Monday that, in light of the declining rate of inflation, there was “no justification for higher interest rates”.
President Ferdinand Marcos, whose support rating dropped by double digits in a recent poll that ranked rising prices as the top issue, will be relieved to see the inflation reading.
When Marcos placed a temporary price cap on rice in September, it caused a stir among experts who cautioned that it may cause market distortion and shortages.
After serving as agriculture secretary for almost a year and failing to control commodity prices, the president appointed a fishing billionaire to the position last week.
