INFLATION SLOWS DOWN TO 3.1 PERCENT IN OCTOBER 2012

MANILA—Cheaper prices of agriculture and fish products slowed down headline inflation to 3.1 percent in October 2012 from 3.6 percent in September, bringing average inflation in the first three quarters at the low-end of government’s target, according to the National Economic and Development Authority (NEDA).

“The year-to-date headline inflation is at a stable rate of 3.2 percent, which is still within the DBCC’s target range of 3.0 to 5.0 percent for 2012,” said Dr. Rosemarie G. Edillon of NEDA’s National Planning and Policy Staff.

According to the National Statistics Office, major food items that experienced slower increases in their prices include oils and fats (-4.5% in October 2012 from -4.9% in September 2012), vegetables (-0.1% from 9.9%), fruit (5.2% from 6.2%), fish (6.0% from revised rate of 6.9%), and bread and cereals (2.1% from 2.3%).

October 2012’s headline inflation is also significantly lower than the rate recorded in the same month in 2011 of 5.2 percent.  Likewise, core inflation slowed to 3.6 percent relative to the 3.8 percent recorded in September 2012 and 4.7 percent in October 2011.

“The continued benign inflation for the period suggests an easing of demand pressures on consumer prices. This should be able to contain inflation for the rest of the year,” the NEDA official said.

Inflation rate is the percent increase in the prices of goods and services commonly purchased by households, as measured by the Consumer Price Index (CPI).  Meanwhile, core inflation represents a more long-term inflation trend, as it excludes certain items that have short-term and volatile price movements.

Aside from agriculture and fish products, price gains in petroleum related products were generally subdued, contributed to lower inflation for the period. Slower annual increases in the price indices of electricity, gas and other fuels (4.9% from 5.0%) and transport services (1.4% from 1.5%) in October 2012 stopped further upward price pressures.

Also, lower annual gains in the prices of unleaded gasoline (ULG) (0.3% in October 2012 from 0.7% in September 2012, kerosene (3.5% from 5.7%), and diesel (3.1% from 5.6%) were registered even though higher electricity charges in October 2012 along with higher price adjustments for  liquefied petroleum gas (LPG).

“These lower price increments caused housing, water, electricity, gas and other fuels and transport costs to rise at a steady pace of 4.5 percent and 1.7 percent, respectively,” said Edillon.

Meanwhile, headline inflation in Metro Manila also further eased to 2.9 percent in October 2012 from 3.5 percent in September 2012.

“This slide was due to mainly lower year-on-year price increases in major commodity groups such as food and non-alcoholic beverages (1.7% from 4.3%) and restaurant and miscellaneous goods and services (3.7% from 3.8%),” she said.  

Also, inflation rate outside Metro Manila dipped in October 2012 to 3.3 percent from the previous month’s 3.7 percent. This was due to small price increases of food and non-alcoholic beverages (2.7% from 3.5%), alcoholic beverages and tobacco (4.8% from 4.9%), clothing and footwear (4.2% from 4.3%), housing, water, electricity, gas and other fuels (4.9% from 5.1%), and recreation and culture (1.9% from 2.0%). 

But from January to October 2012, the year-to-date inflation in Metro Manila stood at 2.9 percent, which is still slower compared to 3.2 percent outside the capital.

“This problem may have to do with inefficient distribution systems outside Metro Manila,” Edillon said. “Metro Manila also has the advantage of agglomeration of consumers, which attracts many producers and more competition unlike those outside the Metro.”

M.R. No. 2012-075

06 November 2012