October inflation eases to 0.8%

THE National Economic and Development Authority (Neda) expects 2019 full-year inflation to settle within the government’s target of two to four percent as inflation continued to decelerate for the fifth straight month in the year.

The Philippine Statistics Authority (PSA) reported Tuesday, Nov. 5, 2019, that the country’s headline inflation eased to 0.8 percent in October 2019, the slowest rate in 3.5 years. This also brings year-to-date inflation to 2.6 percent.

Weaker non-food inflation and partly base effects drove the subdued outturn, coming from 6.7 percent in the same period last year.

Food and non-alcoholic beverages deflation continued for the second consecutive month at 0.9 percent in October 2019, a sharp reversal from the 9.4 percent inflation recorded last year.

Rice deflation was observed for the sixth consecutive month, dropping further to -9.7 percent in October 2019 from -8.9 percent in September.

“The government has been driven and focused in its anti-inflationary efforts this year. We hope to further keep inflation manageable and within the government’s target,” said Neda officer-in-charge and undersecretary for regional development Adoracion Navarro.

Upside risks

She also said that although the government welcomes the easing of inflation, the country must be on the lookout for upside risks such as cases of African swine fever (ASF), which have been observed so far in Rizal, Pangasinan, Bulacan, Nueva Ecija, Pampanga, Cavite and Quezon City.

“The livestock industry in the said ASF-stricken areas, which accounts for 21.7 percent of the country’s total hog production last year, remains at high risk. The government and private companies must collaborate to manage, contain, and control the spread of the disease,” Navarro added.

The Neda official also mentioned that meat processing plants need to be more stringent, stricter biosecurity measures must be enforced and quarantine checkpoints and disinfection facilities must be expanded and placed in key gateways such as seaports, airports and expressways.

Manufacturing sector

Moreover, the upcoming holiday season and strong macroeconomic conditions are seen to contribute to the improved performance of the manufacturing sector for the last quarter of 2019.

Despite the total manufacturing index recording negative growth in September 2019 as stated in the PSA’s monthly integrated survey of selected industries, Neda said manufacturing sub-sectors have shown improvements.

Year-on-year volume of production index and value of production index declined by three and 2.3 percent, respectively. This is the ninth consecutive month in 2019 of decline in volume and value indices.

“Despite the slowdown in the overall performance of the manufacturing sector for September 2019, we have observed improvements in various sub-sectors which can be attributed to the upcoming holiday season alongside lower inflation, stable exchange rate and lower interest rate,” said Navarro.

She cited positive growth in beverages, tobacco products, basic metals, fabricated metal products, wood and wood products, machinery except electrical, chemical products, paper and paper products, printing and rubber and plastic products.

To boost the manufacturing sector over the near term, Navarro said the government will need to push for high impact and implementable infrastructure projects under the Build Build Build program. (PR)