Thursday, 6 August 2009

Philippine inflation hits 22-year low

Cai Ordinario
Business Mirror

PHILIPPINE commodity prices posted a 0.2-percent growth in July 2009, a 22-year low, according to the National Economic and Development Authority (Neda).

The agency said the inflation rate in July was the lowest since April 1987 when inflation was down to 0.99 percent. The low inflation in July also represented the fifth-consecutive month of decline in commodity prices.

Dennis Arroyo, Neda National Planning and Policy Staff director, said the inflation in July may not be the lowest for the year. Arroyo said that in July 2008 inflation was at 12.3 percent while in August 2008 inflation peaked at 12.4 percent.

With that, Arroyo said it is possible that inflation in August 2009 will continue to decline at the same 0.2-percent level or even lower. Arroyo said inflation will continue to be benign owing to the base effect.

“August may post the lowest inflation rate this year due to the base effect. It is possible that inflation in August will be at 0.2 percent also or lower,” Arroyo said in a telephone interview with BusinessMirror.

The inflation data, released by the National Statistics Office (NSO) on Wednesday, indicate that the continued decline was due mainly to the decrease in the food, beverages and tobacco (FBT), fuel, light and water (FLW), and services indices.

Inflation in June was at 1.5 percent. Year-to-date inflation or January to July 2009 slowed to 4.3 percent. Excluding selected food and energy items, core inflation at 3.6 percent was still lower than the 3.9 percent in June.

“This was mainly due to the continued slowing down in the inflation rate of the heavily weighted FBT index and the declines in the annual price movements of FLW and services index. Moreover, slower annual price increases were observed in all other commodity groups during the month,” NSO said in a statement.

“Measured from a month ago, the general level of consumer prices increased at a slower rate of 0.3 percent in July from 0.6 percent in June. This can be attributed to the decrease in the prices of selected food items such as corn, fish and rice,” the NSO added.

The NSO said declines in the year-on-year inflation rates were noticed in all commodity groups. FLW and the services indices recorded a negative rate of -4.8 percent and -3.8 percent in July from -5.4 percent and -1.1 percent in June, respectively.

Data also showed that inflation for FBT slowed to 1.6 percent from 3.1 percent; clothing, 2.3 percent from 2.5 percent; housing and repairs, 2.4 percent from 2.8 percent; and miscellaneous items, 2.6 percent from 2.8 percent.

“At the national level, annual inflation rate for food alone further went down to 1.5 percent in July from 3 percent in June [2009],” the NSO added.

In addition, the NSO said the annual price increases in July were slower in all the food groups except for fish, whose annual inflation rate was higher at 6.7 percent from 4.8 percent.

On a year-on-year basis, the price increment in rice and corn correspondingly fell to -5.7 percent and -8.6 percent from their respective last month’s rates of -0.6 percent and -2.1 percent.The NSO said price increases in cereal preparations decelerated to 5.6 percent from 6.7 percent; dairy products, 6.1 percent from 6.7 percent; eggs, 7.1 percent from 7.4 percent; fruits and vegetables, 2.3 percent from 3.9 percent; meat, 3 percent from 3.3 percent; and miscellaneous foods, 2.7 percent from 3.1 percent.

Meanwhile, inflation in the National Capital Region (NCR) contracted by 1 percent in July from -0.1 percent in June as the services and FLW indices posted negative year-on-year rates. The NSO added there were also slowdowns in the annual price increases of FBT, clothing and housing and repairs also contributed to the downtrend.

Similarly, the negative annual rates recorded in the FLW and services indices and the slowdown in the inflation rates of the rest of commodity groups resulted in a lower growth rate of 0.7 percent in Areas Outside the National Capital Region.

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