By Luisa Maria Jacinta C. Jocson, Reporter
HEADLINE INFLATION accelerated in November, as costs of vegetables, meat, and seafood increased due to a series of typhoons, the Philippine Statistics Authority (PSA) reported on Thursday.
The consumer price index (CPI) rose to 2.5% year-on-year in November from 2.3% in October, although it was lower than 4.1% for the same month last year.
Inflation remained within the Bangko Sentral ng Pilipinas’ (BSP) 2.2%-3% projection for the month.
The November figure also aligned with the median forecast from a BusinessWorld survey of 15 analysts conducted last week.
Headline inflation averaged 3.2% over the 11-month timeframe, slightly surpassing the BSP’s full-year baseline estimate of 3.1%.
“The most recent inflation data aligns with the BSP’s viewpoint that inflation will remain closer to the lower end of the target range in the near future,” the central bank stated in an announcement.
Core inflation, which excludes unpredictable prices of food and fuel, increased to 2.5% in November from 2.4% the previous month. Core inflation averaged 3% during the January-November period.
The primary driver of the CPI increase for the month was the food and nonalcoholic beverages index, according to National Statistician Claire Dennis S. Mapa. The heavily weighted index rose to 3.4% in November from 2.9% in October.
Food inflation at the national level surged to 3.5% in November, up from 3% the previous month. This spike was mainly attributed to vegetables, tubers, plantains, cooking bananas, and pulses, which jumped to 5.9% in November, contrasting with the 9.2% decline in October and a 2% drop a year earlier.
Mr. Mapa indicated that this was largely due to the series of typhoons that struck the country that month.
“Nearly all items in the vegetable category experienced a price surge,” he commented in a mix of English and Filipino.
For instance, he mentioned the prices of tomatoes, which rose to 37.2% in November from -47.9% the previous month.
In November, the country recorded six typhoons entering its Area of Responsibility, as stated by the state meteorological agency.
Agricultural losses from tropical storms Nika, Ofel, and Pepito reached ₱785.68 million, according to the latest report by the Department of Agriculture (DA).
An increase in annual inflation was also observed for fish and other seafood (0.4% from -0.4% the previous month) and meat and other parts of slaughtered livestock (3.9% from 3.6%).
RICE PRICES
“The positive news is that the inflation rate of rice is decreasing,” Mr. Mapa remarked.
Rice inflation declined to 5.1% in November from 9.6% the month before. Nonetheless, this staple grain remained the largest contributor to inflation that month, accounting for 17.7% or 0.4 percentage point of total inflation.
“From January to November, there has been a downward trend. While base effects play a role, the retail prices per kilogram for regular milled, well-milled, and special rice are also decreasing,” Mr. Mapa explained.
PSA data revealed that the average price of regular milled rice fell to ₱49.24 per kilo in November from ₱50.22 in October; well-milled rice decreased to ₱54.64 from ₱55.22; and special rice dropped to ₱63.72 from ₱63.97.
“We anticipate that December will see a further slowdown in rice inflation, which is promising for our households. Inflation for the lowest 30% also decreased because of the significant weight of rice for them,” he added.
Rice prices have been declining since the executive order which reduced tariffs on rice imports to 15% came into effect in July.
Agriculture Secretary Francisco P. Tiu Laurel, Jr. stated they are striving to lower rice prices further, particularly with the newly launched Rice-for-All program, which was introduced to local markets on Thursday.
The initiative aims to supply rice at ₱40 per kilogram.
“If international rice prices continue to decrease, the peso remains stable, and tariffs remain low, we will likely observe a further decline in the price of well-milled rice in the upcoming months,” the DA chief commented.
Meanwhile, transport inflation recorded a milder decline to -1.2% from -2.1% in October but increased from -0.8% a year prior.
In November, fuel price adjustments resulted in a net increase of ₱1.70 per liter for gasoline, ₱3.20 per liter for diesel, and ₱1.60 per liter for kerosene.
Mr. Mapa also highlighted the impact of the peso’s depreciation on imported goods such as fuel.
“This poses a risk as it affects our commodity prices, particularly fuel… that’s the influence, since we purchase it in US dollars,” he remarked.
The peso plummeted to the ₱59-per-dollar mark twice during the month, reaching a record low on November 21 and 26.
Data from the PSA indicated that inflation for the lowest 30% of income households eased to 2.9% in November from 3.4% the previous month and 4.9% a year earlier.
Over the 11 months leading to November, inflation for the lowest 30% averaged 4.3%.
In the National Capital Region (NCR), inflation accelerated to 2.2% from 1.4% in the previous month, while inflation in areas outside NCR remained stable at 2.6%.
National Economic and Development Authority Secretary Arsenio M. Balisacan mentioned that consumer prices have remained “relatively stable” despite the adverse effects of inclement weather.
“We are dedicated to upholding price stability by ensuring inflation stays low and manageable. This will be backed by prudent monetary policies and strategic trade measures in the near term, along with improved access to quality job opportunities and productivity-boosting reforms in the medium term,” he stated.
December inflation is also expected to remain within target, Mr. Balisacan added.
“We are well on track to keep our inflation within the target range for the entire year, despite facing some challenges such as the strong succession of typhoons that impacted the agricultural sector,” Finance Secretary Ralph G. Recto remarked.
RISKS TO UPSIDE
However, the BSP reiterated that the balance of risks regarding the outlook for 2025 and 2026 has shifted to the upside.
“Upside risks to the inflation forecast may arise from possible increases in electricity rates and higher minimum wages in areas outside Metro Manila, while downside factors are still connected to the effects of reduced import tariffs on rice,” it noted.
With the latest inflation report, the BSP indicated it will “continue to adopt a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment.”
Analysts similarly suggested that inflation should remain well-anchored in the months ahead.
“Looking forward, inflation is likely to stay firmly within the BSP’s 2-4% target. Key upside risks remain, including adverse weather, geopolitical instability, higher-than-anticipated wage increases, and upward adjustments in electricity rates,” Chinabank Research stated in a note.
Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco projected that headline inflation will likely average 3.2% this year and 2.4% in 2025.
The inflation outlook will aid the BSP in further easing policy rates, analysts remarked.
“Moreover, we expect the BSP to lower policy rates by another 25 basis points (bps) later this month, since inflation remains comfortably within its 2-to-4% target range,” Mr. Chanco stated.
The Monetary Board is scheduled for its final policy-setting meeting of the year on December 19.
BSP Governor Eli M. Remolona, Jr. mentioned that the Monetary Board could choose to pause its easing cycle or implement another 25-bp rate cut later this month.
Inflationary pressures might lead them to maintain rates, but sluggish economic growth could prompt them to reduce rates, he remarked.
This year, the BSP has executed a total of 50 bps worth of rate reductions in increments of 25 bps during its policy reviews in August and October.
