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Inflation continues to weaken, but ASF poses upside risk

Updated: Nov 11, 2019

Prices of most basic goods are more or less stable as the country’s headline inflation continued to ease in October 2019, reaching a new low of 0.8% since the 0.9% in May 2016.

This brought the year-to-date inflation to 2.6%, which is still within the government’s target of 2% to 4%, National Economic and Development Authority (NEDA) Officer-in-Charge (OIC) Adoracion M. Navarro said in a statement.

The October 2019 inflation was slower than the 0.9% in September 2019 and just a fraction of the 6.7% a year ago, or in October 2018.

The Bangko Sentral ng Pilipinas, for its part, said the latest inflation outturn was consistent with its prevailing assessment of a benign inflation outlook. The central bank also expects inflation to stay within the government’s target range.

Navarro of NEDA, however, warned that the African Swine Fever (ASF) outbreak in Central Luzon and Southern Tagalog regions in Luzon could pose an upside risk to inflation.

ASF cases have been reported in 22 areas in the provinces of Rizal, Pangasinan, Bulacan, Nueva Ecija, Pampanga, and Cavite, as well as in Quezon City, according to a situation update by the Food and Agriculture Organization (FAO).

“The livestock industry in the said ASF-stricken areas, which accounted for 21.7% 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 said.

She stressed that meat processing plants need to implement more stringent, stricter biosecurity measures, and quarantine checkpoints and disinfection facilities must be expanded and placed in key gateways such as seaports, airports, and expressways.

The Philippine Statistics Authority (PSA) traced the downtrend in inflation to the 0.9% annual drop registered in the heavily-weighted food and non-alcoholic beverages index.

Transport inflation also declined further by 1.7% while slower annual increments were also noted in: housing, water, electricity, gas, and other fuels, 0.6%; furnishing, household equipment and routine maintenance of the house, 2.7%; and health, and restaurant and miscellaneous goods and services, both at 2.9%.

The PSA said, however, that annual increases were higher in the indices of alcoholic beverages and tobacco at 16.5%; and clothing and footwear, 2.8%.

Excluding selected food and energy items, core inflation decelerated further to 2.6% in October 2019 from 2.7% in September 2019 and 4.9% in October 2018.

Year-on-year food inflation remained negative in October as prices of rice, corn, vegetables as well as sugar, jam, honey, chocolate, and confectionery continued to decline relative to year-ago levels.

Rice deflation was observed for the sixth consecutive month, dropping further to -9.7% in October 2019 from -8.9% in September. Rice prices, however, remained high, with special local rice sold at up to P61 per kilo and special imported rice at P71 per kilo in supermarkets.

Other food items that posted lower year-on-year inflation in October include fish, oils, and fats along with food products not elsewhere classified. (Ventures Cebu)

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