Inflation eases for third straight month

Published December 7, 2021, 9:07 AM

by Chino S. Leyco

The rate of increase in consumer prices continued to decelerate for the third straight month in November due to slowdown in food costs, the Philippine Statistics Authority (PSA) reported.

The headline inflation rate further eased to 4.2 percent last month from 4.6 percent in October, but still higher compared with the 3.3 percent seen in November 2020, data from the PSA revealed on Tuesday, Dec. 7.

The latest inflation print brought the 11-month average at 4.5 percent, still above the government’s target band of 2.0 percent to 4.0 percent.

The decline in the overall year-on-year inflation last month was primarily driven by the slowdown in inflation for food to 4.1 percent from 5.6 percent in October.

In particular, vegetable inflation turned negative at -1.8 percent from 11.4 percent in October. Fish inflation also dropped to 7.9 percent from 9.5 percent in the same period.

Meat inflation likewise decreased to 10.7 percent from 11.9 percent, while pork inflation decreased to 17.3 percent from 23.3 percent.

However, on a month-on-month basis, both meat and pork recorded positive inflation at 2.4 and 4.2 percent, respectively.

Latest data from the Department of Agriculture showed a slower pork import arrival with only a 42 percent utilization of the expanded pork minimum access volume (MAV) as of end-November.

At the same time, the unreleased inventory of frozen pork is reported at 76,953 metric tons.

The slow importation and release of inventory, together with higher demand due to the Christmas season, led to higher average pork prices in November, Chua said.

“Pork prices continuously went down month-on-month from July to early-October. This means that our policy to temporarily import pork has been effective,” Socioeconomic Planning Secretary Karl Kendrick T. Chua said.

“However, the uptick in prices in November shows that we need to further ease administrative requirements for the unloading and distribution of stocks to encourage more importation and help bring back pork prices to their pre-African Swine Fever level,” he added.

Meanwhile, non-food inflation slightly rose to 4.1 percent from 3.8 percent for the same period. The main driver was high international crude oil prices, which drove up transport inflation to 8.8 percent from 7.1 percent.

This was also reflected in the higher inflation seen in housing, water, electricity, gas, and other fuels at 4.6 percent from 4.4 percent.

In a bid to support qualified public utility jeepney operators amid high oil prices, the Land Transportation Franchising and Regulatory Board has started distributing cash grants worth Php 1 billion through its Pantawid Pasada Program.

As of November 24, around 78,000 out of 136,000 target beneficiaries have received fuel subsidies.

The government has also increased the passenger capacity for public utility vehicles (PUVs) from 50 percent to 70 percent in areas under Alert Level 2 to increase mobility and help PUV drivers earn more.

The National Economic and Development Authority (NEDA) recommended further increasing passenger capacity to up to 100 percent for all transport types as vaccination rates increase.

“Enhancing people’s mobility while observing health protocols is crucial as we sustain our economic recovery amid the threat of the Omicron variant,” Chua said.

“As restrictions ease, we recommend increasing public transport capacity to 100 percent as vaccination rates increase to reduce crowding in terminals and help protect commuters and drivers from future oil price shocks,” he added.

Meanwhile, ING Bank Senior Economist Nicholas Mapa noted that the November inflation rate was still faster than market expectations for a 4.0 percent pickup in prices.

“Food inflation lowed in November resulting from improved harvest due to favorable weather conditions. Meanwhile, higher electricity and transportation costs offset the deceleration in food price,” Mapa said.

“Elevated global crude oil prices filtered through to increased electricity bills and pricier diesel, keeping the headline inflation number above target for another month,” he added.