The rate of increase in consumer prices likely slowed to its lowest level since October 2020, with forecasts indicating a decline to 2.5 percent for September, from 3.3 percent in August.
Stefan Angrick, Moody’s Analytics senior economist, explained that the significant decrease in inflation is primarily due to lower rice prices and recent tariff cuts.
Additionally, favorable base effects are contributing to the slower inflation last month, Angrick said.
“Base effect” means that price increases this year are less pronounced compared to the more substantial increases observed last year, especially in essential goods like rice, which significantly contributes to the country's overall food costs.
The inflation dynamics have been notably affected by last year's surge in rice prices, following India's ban on the export of non-basmati white rice.
However, in a positive turn for the Philippines, India has recently allocated 295,000 metric tons of non-basmati white rice to the country, marking its largest export since lifting the restrictions.
Furthermore, a tariff reduction on imported rice, effective from the end of June and continuing until the year's end, is expected to alleviate inflationary pressures on this staple food.
Despite the positive outlook for rice, Moody Analytics’ economists caution that rising electricity rates may counterbalance the overall inflation drop. Department of Finance Secretary Ralph G. Recto also said the government's decision to distribute the electricity rate increase over 36 months would ease the financial burden on consumers.
At a press briefing on Sept. 24, Recto said that while the country is on track to meet its inflation target for September, external factors—particularly the ongoing conflict in the Middle East—could lead to rising oil prices and further complications for the economy.
The Philippine Statistics Authority will release the official Consumer Price Index (CPI) data on Friday, Oct. 4. (Derco Rosal)