Inflation steadies in October as stable food costs offset fuel price hikes

Manila, Philippines – Inflation, or the rate at which consumer prices rise, was steady in October, thanks to stable food prices offsetting pressures from costlier imported fuel aggravated by a record-low exchange rate.

October’s 1.7 percent reading matched September’s inflation print, and settled near the lower end of the central bank’s forecast range of 1.4 percent to 2.2 percent for the month, according to latest data from the Philippine Statistics Authority (PSA).

The peso’s tumble to an all-time low of P59.13 last month made imported goods more expensive, but the PSA said the data did not aggregate which food like meat and other imported items took a hit. What is clear is that oil contributed to price increases.

Diesel inflation was 5.7 percent in October, faster than the previous month’s 5.1 percent. Gasoline deflation was -0.7 percent last month versus September’s -0.9 percent, PSA data showed.

“The exchange rate impacts these two fuel variants because we are buying the goods in US dollars,” National Statistician Dennis Mapa said in Filipino, addressing a press briefing.

But cushioning those price pressures from oil was food inflation: Rice deflation continued. Tomato and onion prices, however, rose amid a string of typhoons.

“Production of palay rose plus stocks, we have a substantial supply… Prices in the global market are also declining, that affected in a good way our rice prices,” Mapa said.

The peso strengthened to a two-week high of P58.15 against the greenback on Tuesday, but gave up some of those gains to end Wednesday’s trade at P58.83 per dollar.