Cebu, PHILIPPINES, Dec 5, 2014 – Inflation in the Philippines has dropped to an 11-month low of 3.7% in November, following a previous drop to 4.3% in October, and remains within the Bangko Sentral ng Pilipinas (BSP) forecast range of manageable inflation 3.5% to 4.3%.
The recent drop in inflation can be attributed to lower food prices (a drop of 0.5% in inflation, down from 7.2% in October), which account of 90% of inflation within the Philippines CPI basket of goods, and has been aided by the precipitous drop in oil prices following the OPEC decision not to cut production with oil prices now at their lowest level since 2010. This has fed into lower full and electricity prices with double digit increases observed from some retailers and Meralco reducing their electricity generation charge by 9.9%.
“This further easing is good news for our economy,” Socio-economic Planning Secretary Arsenio M. Balisacan said in a statement.
Full-year inflation remains at 4.3%, which is within the targeted range of the Development Budget Coordination Committee (DBCC).
However, this favorable inflation environment is likely to be short-lived with the traditionally strong spending holiday season coming up coupled with the effects of super typhoon Hagupit on domestic food production.
The Department of Agriculture estimates 691,692 hectares of rice lands and 303,542 hectares of corn, already at maturity, under threat of destruction, and reports of panic buying in potentially affected areas occurring. At a December 4 meeting of the National Disaster Risk Reduction and Management Council (NDRRMC) President Benigno Aquino III ordered the Department of Trade and Industry (DTI) to help deter what he called, “unusual price hikes” in the prices of basic goods in areas expected be hit by the typhoon. He ordered the “deployment now” of rolling government stores, which would provide basic goods at discounted prices in affected areas.
The Philippines economy is still expected to grow strongly into 2015 with solid domestic demand, a forecast uptick in public spending on infrastructure, and positive consumer and business sentiment.