Amid strong typhoons and adverse weather conditions that hit the country, manufacturing input costs rose for the third consecutive month in October, although the pace of increase was slower compared to September, the latest Philippine Statistics Authority (PSA) data showed.

The PSA reported on Tuesday, Dec. 2, that the year-on-year producer price index (PPI) for the manufacturing sector grew by a slower 0.3 percent in October, easing from the 0.8-percent increase recorded in September. In the same month last year, manufacturing PPI registered an annual decline of 0.4 percent.

PSA data showed that on a month-on-month basis, manufacturing PPI increased by 0.4 percent, faster than the 0.1-percent rise recorded in September but lower than the 0.9-percent growth seen in October last year.

The PSA reported that on a year-to-date basis, the manufacturing sector’s PPI posted a 0.4-percent increase.

PSA data showed that the slower annual rise in manufacturing PPI for October was mainly driven by the one-percent annual drop in the price index for manufacture of computer, electronic, and optical products, reversing the 0.6-percent growth recorded in September.

Computer, electronic, and optical products manufacturing costs accounted for 56 percent of the overall slowdown in manufacturing PPI’s annual growth rate. The PSA noted that this industry division carries the second-largest weight among the 22 manufacturing sectors used in computing PPI.

PSA data also pointed to slower annual gains in key industries as contributors to the deceleration in manufacturing PPI. The annual increase in manufacture of food products eased to 0.4 percent in October from 0.7 percent in September, while cost increases to manufacture basic metals slowed to 1.4 percent from 2.2 percent over the same period.

The PSA noted that price hikes to manufacture coke and refined petroleum products (3.5 percent) were the largest contributor to overall annual growth in manufacturing PPI. This was followed by manufacture of transport equipment (one percent) and basic metals (1.4 percent).

For manufacture of food products, the PSA reported that the year-on-year PPI growth rate posted a slower annual increase of 0.4 percent in October, down from 0.7 percent in September. PPI for food manufacturing registered an annual increment of 1.7 percent in October 2024.

“The slower rise in October’s producer prices reflects easing cost pressures,” Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., told Manila Bulletin on Tuesday, Dec. 2.

“Food prices cooled as supply improved, and global commodity prices—especially energy—stabilized after earlier spikes. Manufacturers are getting some breathing room, but risks remain from volatile electricity costs and imported raw materials. If oil or supply chain shocks return, PPI could climb again,” he added.

Robert Dan Roces, group economist at Sy-led conglomerate SM Investments Corp. (SMIC), emphasized that, “global semiconductor pricing and electronics demand softened in October, pulling down our manufacturing PPI despite still-positive contributions from petroleum products and transport equipment.”

He added that input cost pressures appear to be easing for the retail and logistics sectors, even as the electronics manufacturing industry continues to encounter challenges.

“[It] suggests that cost pressures on manufacturers are easing, even if prices are still rising year-on-year. This moderation can be attributed to a few factors: global commodity prices, especially oil and some raw materials, have stabilized compared to earlier months; supply chains are smoother; and domestic demand has softened, reducing the pressure on firms to raise prices aggressively,” said John Paolo Rivera, senior research fellow at state policy think tank Philippine Institute for Development Studies (PIDS).

“Some industries are also adjusting from earlier high-cost periods and are now seeing more normal input prices. Overall, slower PPI growth reflects a cooling of cost-push pressures, consistent with the broader slowdown in manufacturing activity,” he added.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the slower year-on-year price rise reflects improved weather since July. Earlier typhoons, floods, and earthquakes had temporarily pushed up prices, but price controls in calamity-hit areas helped stabilize costs.

“For the coming months, local prices could seasonally pick up during the Christmas holiday season amid higher demand by consumers in what is considered the seasonal peak in spending in a typical year, only for prices to seasonally go down after the said holiday season upon crossing the new year,” he added.

(Ricardo M. Austria)