Food, transport prices raised August inflation to 3.1%: NEDA

September 5, 2017

Higher prices of food, transport, water, electricity, and gas pushed up inflation in August. A report from National Economic Development Authority (NEDA)-attached agency Philippine Statistics Authority Tuesday said headline inflation increased to 3.1 percent in August 2017 from 2.8 percent in the previous month. This was the second straight month that the inflation rate rose after hitting a 28-month high of 3.4 percent in March and April. The August data matched the May tally of 3.1 percent. Core inflation, which excludes select volatile food and energy prices, also rose to 3.0 percent in August, higher than the revised 2.8 percent in July. This is slightly higher than market expectations of 3.0 percent, but still within government’s target of 2 to 4 percent. Although within range of the government's forecast, NEDA Director Ernesto Pernia said the situation will be monitored. “Inflation is still expected to remain well within government’s target for the year despite accelerating for the second time in a row. Nonetheless, we should continue to closely monitor upside and downside risks,” Pernia said. Food inflation rose to 3.7 percent in August 2017 from 3.4 percent in July 2017. This is mainly due to faster price increases in vegetables, fish, corn, flour, bread, and other cereals. “One cause is Typhoon Jolina last month, which affected agriculture in Central Luzon, particularly in Aurora,” Pernia said. Central bank governor Nestor Espenillia said in a statement "it continues to see a manageable inflation outlook over the policy horizon after  taking into consideration the latest inflation heading in August." Espenilla said inflation is projected to settle near the midpoint of the government's target range of 3 percent, plus and minus one percentage point in 2017 to 2019. Meanwhile, non-food inflation rose to 2.7 percent from 2.4 in July. This is due to faster price adjustments in transport, housing, recreation and culture, communication, restaurants, water, and electricity and gas. Higher domestic petrol prices, particularly unleaded gasoline, diesel, kerosene, and liquefied petroleum gas, mainly caused higher inflation in the transport sector. “The continuing surge in domestic petrol prices, coupled with depreciation in the peso-dollar rate, may exert upward pressures on inflation, leading to increases in the cost of electricity, gas, and other fuels in the near term,” Pernia said. DMS