Consumer prices in August remained stable despite the bad weather that threatened the supply of key commodities.
But the central bank has signaled that it is prepared to implement new measures to control inflation in the event of another conflict in the Middle East, which is expected to destabilize international oil prices.
“Despite the adverse effects of Typhoon Labuyo and tropical storm Maring, inflation rate of most food items declined on an annual basis,” Socioeconomic Planning Secretary Arsenio Balisacan said in a statement.
Inflation in August reached a four-year low of 2.1 percent, dropping from an already modest 2.5 percent the month before. This brought the year-to-date average rate of rise in consumer prices to 2.8 percent, which was below the Bangko Sentral ng Pilipinas’ (BSP) target range of 3 to 5 percent for the year.
The slower year-on-year increase of overall consumer prices resulted from the reduction of prices in the National Capital Region (NCR) and slower price adjustments in areas outside the capital.
Nonfood items also recorded slower price increases in August 2013 brought about by cheaper electricity, gas and other fuels. Lower inflation was also noted in the operation of personal transport equipment (2.9 percent from 5.6 percent) and transport services (0.3 percent from 0.4 percent).
“This reflects the lower generation charge of Manila Electric Co., which is now able to source power strategically from suppliers with lower cost, and the decline of international crude price during the period,” Balisacan said.
Despite the adverse effects of Typhoon Labuyo and tropical storm Maring, inflation of most food items declined on an annual basis. In Metro Manila, prices of meat and several vegetable items were even lower than that of the previous year, Balisacan said.
In a separate statement, BSP Governor Amando M. Tetangco Jr. said that, although inflation fell below the target range, monetary authorities are ready to deploy measures to counter a possible uptick in prices in the coming months.
“The BSP will continue to closely monitor developments, particularly in the Middle East, that may (have an) impact on the international prices of commodities,” Tetangco said. “The BSP has room in its policy toolkit to mitigate potential adverse effects [arising] from these factors.”
The BSP measures include providing foreign exchange liquidity through spot and swap markets, the creation of hedging facilities, and the relaxation of certain monetary rules.