INFLATION slowed down to 3.3 percent in November and is forecast to continue at this low level until the end of the year and beyond.
This will make Filipino families’ Christmas shopping less inhibited, boosting this year’s holiday season cheer.
As reported in our Business Times headline story on Wednesday by Mayvelin U. Caraballo, the government attributed the inflation decline to slower increases in food prices.
This dip in the inflation rate is, however, higher than that in the same period last year, which was 2.5 percent.
According to the government’s inflation report, the November inflation was the lowest since August’s 3.1 percent and brought the year-to-date figure to 3.2 percent, above the midpoint of the government’s 2 percent to 4 percent target.
The Times had polled economists. Their average inflation forecast was 3.2 percent, which is 0.1 percent lower than what actually materialized.
The Department of Finance also had a 3.2 percent estimate while the Bangko Sentral ng Pilipinas (BSP) had a forecast range of 2.9 to 3.6 percent.
The National Economic and Development Authority (NEDA) noted that the slowdown in consumer price growth ended four consecutive months of price increases.
Citing Philippine Statistics Authority (PSA) data, the NEDA said food and non-alcoholic beverage inflation eased to 3.2 percent in November, down from the previous month’s 3.6 percent and the lowest recorded since October 2016.
The slowdown was attributed to lower prices of vegetables, sugar, jam, honey, chocolate and confectionery, fruits, oils and fats and rice.
“We are starting to see year-on-year price declines for ampalaya, cabbage, carrots, tomato, white potato, and imported garlic in the National Capital Region. This signifies that supply is starting to stabilize again,” Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
Non-food inflation, meanwhile, slightly increased to 3.3 percent in November from the previous month’s 3.2 percent.
Core inflation, which strips out volatile food and fuel prices, climbed to 3.3 percent from 3.2 percent in the previous month and 2.4 percent a year earlier.
Year-to-date core inflation settled at 2.9 percent, the PSA reported.
Commenting on this development, Bangko Sentral Gov. Nestor Espenilla Jr. said the November easing was expected.
“We’re still on track with 3.2 percent inflation for 2017, just about the midpoint of [the]target range,” he said in a message to reporters.
The NEDA said data for the last 11 months indicated that full-year inflation would settle slightly above the midpoint but remain well within the 2 to 4 percent target.
“This already considers expected price spikes owing to holiday season spending this December,” Pernia said.
But this happy situation faces the risk of being overturned.
Oil prices are expected to go higher. The Organization of Petroleum Exporting Countries (OPEC) has decided to extend production cuts. This will cause domestic power and fuel prices to increase, which will then promote inflation.
“Overall, however, the inflation outlook for full-year 2017 remains supportive of the current economic growth momentum of the country,” Pernia said.
The good Philippine economic performance these past years is mostly the effect of much increased public and household spending, the growth of our exports and the strength of the manufacturing and the services sectors.
Our business and industrial leaders, with government, must sustain this growth, mainly by more investments. Our country unfortunately still has repulsive deterrents to business and industrial growth. These include red tape and corruption, restrictions on foreign ownership (which, however, are now much reduced and are expected to disappear with the passage of a new law), still poor infrastructure (compared with our Asian neighbors), high electricity costs and the poor, sometimes abusive, implementation of laws, rules and regulations.
Also very important is making our economic successes benefit the poorest elements of our society.
The very large part of our population who say they are poor – 47 % – proves that the fruits of the past decades’ economic growth have failed to reach the millions of poor Filipinos.
This problem cries for more solid planning and action by government and the private sector.