The rate of increase in consumer prices softened to a four-month low in September due to cheaper food items, data from the Philippine Statistics Authority (PSA) showed on Tuesday.
The country’s headline inflation ticked in at 2.3 percent last month, slower compared with 2.4 percent in August, but quicker than the 0.9 percent in the same month last year.
The September inflation rate is the weakest since the 2.1 percent seen in May, but at the upper end of the Bangko Sengtral ng Pilipinas’ forecast range of 1.8 percent to 2.6 percent.
The PSA attributed the slower inflation, which also marked its second-straight month of decline, on heavily-weighted food and non-alcoholic beverages which eased to 1.5 percent from 1.8 percent in the previous month.
For the food, inflation continued to decelerate to 1.5 percent in September from 1.7 percent in August.
Breaking down, the indices for rice and corn both decreased by -0.6 percent, while vegetable prices fell further to -2.7 percent last month.
Aside from food items, slower inflation was recorded for alcoholic beverages and tobacco at 12.9 percent, while clothing and footwear settled at 1.8 percent, and furnishing, household equipment and routine maintenance of the house at 3.7 percent.
Moreover, the price of recreation and culture dropped further to -0.5 percent during the month.
Meanwhile, inflation was quicker compared with the previous month in housing, water, electricity, gas, and other fuels (1.2 percent); transport (8.3 percent); communication (0.4 percent); and education (0.9 percent).
The core inflation, which excludes selected food and energy items, also inched up at a much faster pace in September to 3.2 percent from 3.1 percent in the previous month and 2.7 percent in the previous year.
The September headline inflation brought the country’s first eight-month average at 2.5 percent, well within the Duterte administration’s target of 2.0 percent to 4.0 percent.
Meanwhile, inflation in Metro Manila remained at 2.2 percent for three consecutive months in September, while in area outside of the national capital region, the rate also slowed down to 2.4 percent from 2.5 percent in August.
‘Good financial situation’
The country remains in a “good financial situation” despite the coronavirus crisis but must further open up the economy, Finance Secretary Carlos Dominguez III said Monday.
In a meeting with President Duterte and other Cabinet members Monday night, Dominguez noted that the strict coronavirus quarantine was “holding back” the growth of the local economy.
“We are still, we are in a good financial position. We are not under stress. We have a good economy,” Dominguez said in his remarks aired on state television.
“What is happening is that this very strict quarantine is holding it back. We have to really open the economy more,” he added.
Except for seven places, the country is largely under the relaxed modified general community quarantine (MGCQ) for the month of October as the government moves to revitalize the economy and allow more people to return to work.
The country fell into recession after the economy endured a record slump in the second quarter of the year as the pandemic lockdown affected businesses and led to job losses.
Metro Manila, Batangas, Tacloban City, Bacolod City, Iligan City, and Iloilo City have been placed under general community quarantine. Lanao del Sur
will stay under the stricter modified enhanced community quarantine until the end of the month.
Dominguez said he was “happy to report” about the country’s improved finances, citing revenue collection, loans and grants, as well as dividends from state corporations.
On tax collection, he said the Bureau of Internal Revenue and the Bureau of Customs (BoC) have collected ₱1.82 trillion from January 1 to September 31, higher than the estimated ₱1.68 trillion.
“We are 8.26 percent over our estimate. So our collections are good. The BIR and the BOC are doing a good job. Of course, the total collections compared to last year are lower kasi mas less ang business activity ngayon (because there are lesser business activities now),” he said.
“We are 12 percent below last year,” he added.
On another source of funds, Dominguez said they have secured more than $9 billion worth of loans and grants from foreign lenders.
“The interests of these loans are very low and the term is very long. So we have to thank our multilateral agencies and countries like Japan who have been providing good financing for us,” he said.
Dominguez also said the government has also been able to borrow from the local market after the Bangko Sentral ng Pilipinas (BSP) provided “a lot of liquidity to the banks and to the local market.”
“About 70 percent of our borrowings come from the local market — pesos — and about 30 percent from abroad. So our loans from abroad are still coming in,” he added.
Boosting the government coffers is the ₱130 billion worth of dividends remitted by government owned and controlled corporations (GOCC), according to Dominguez.
“Last year, the whole of 2019, we collected about 65 billion pesos from our state-owned companies as dividends. This year, we have collected already 130 billion from these companies,” he said.
With these sources of funds, Dominguez assured the nation that the budget deficit can be managed.
“We are in a good financial position and we can finance the deficit that we have. So we have not cut the budget. We also don’t cut the budget because if you cut the budget, you will make the situation even worse. So people will lose their jobs and we cannot do our projects,” he said.
He said the government has “prepared well,” citing measures such as the tax reform measure and the rice tariffication law that helped manage the crisis. (With a report from Genalyn Kabiling)