MANILA, Philippines (Eagle News Service) — For second consecutive month, price increases for food slowed down pulling down the inflation rate to 4.3 percent this October, according to the National Economic and Development Authority (NEDA).
Food inflation recorded a 7.2 percent year-on-year growth in October 2014 compared to the previous month’s 7.8 percent.
“Ample supply of meat, fish, and vegetable items in the market and easing of commodity prices helped reduce price pressures,” said Economic Planning Secretary Arsenio M. Balisacan.
In September 2014, inflation rate registered at 4.4 percent – a slide from August 2014’s inflation rate of 4.9 percent.
Balisacan, who is also NEDA Director-General, explained that the easing of the port congestion in Manila may have contributed to the slow price increases in the market.
“In part, the easing of logistics bottleneck in the port of Manila starting September 2014 may have also contributed to the abatement of price pressures in October 2014,” he said.
A NEDA release said the year-to-date inflation stood at 4.3 percent which was still within the Development Budget Coordination Committee’s target of 3.0 to 5.0 percent for 2014.
Balisacan said the easing prices of commodities in the international market amid improved supply were reflected in the domestic markets. However, this favorable impact was negated by the year-on-year upward adjustments in electricity charges during the period.
Price indices of electricity, gas and other fuels went up to 3.2 percent in October 2014 from 2.4 percent. Electricity price increased as a result of the PhP0.67 per kilowatt hour generation charge of the Manila Electric Company or MERALCO.
“Overall, the tempered inflation outturn is expected to provide the Bangko Sentral ng Pilipinas (BSP) room to possibly keep its key policy rates steady,” he said.
The Monetary Board in October 23, 2014, kept the BSP key policy rates unchanged at 4.0 percent for the overnight borrowing or reverse repurchase (RRP) facility and 6.0 percent for the overnight lending or repurchase (RP) facility. This was done due to easing pressures for commodity prices, robust domestic demand, adequate domestic liquidity, and strong bank lending growth.
“On the external front, global economic prospects are expected to remain uneven, thus mitigating upward pressures on commodity prices,” said Balisacan.
The government will remain vigilant against inflation risks and will continue efforts to ensure supply sufficiency of key commodities and to mitigate the impact of a possible dry spell. The government also continues to explore more lasting solutions to the port congestion problem to avoid disruptions in the domestic supply chain that could result in higher transportation costs. (Eagle News Service with a report from NEDA)
