New low for inflation seen

INFLATION will likely hit a new record low of 0.5 percent in September on the back of slower increases as well as year-on-year declines in the prices of basic goods and services, the chief economist of the Department of Finance said.

“Inflation in September is expected to stay below 1 percent. This time, however, it may fall to 0.5 percent, breaking the 0.6-percent mark last month,” Finance Undersecretary Gil S. Beltran said in an economic bulletin last week.

The rate of increase in prices of basic commodities in September last year was also higher at 4.4 percent.

“The slow rise in prices is tempered and will continue to be tempered by tamed food price changes. Low prices of other basic commodities such as fuels and transportation continue to benefit from developments in the international market,” Beltran explained.

Inflation would have slowed year-on-year and month-on-month in the following commodity groups: Food and non-alcoholic beverages, health, and restaurants and miscellaneous services.

Meanwhile, the prices of housing, utilities and fuels as well as transport and communication would have contracted further in September from last year.

Beltran also noted that power rates have been cut for five consecutive months, bringing Manila Electric Co. (Meralco) rates this month down by 17 percent from a year ago.

This month, Meralco’s rate per kilowatt-hour (kWh) for consumption of 300 kilowatts a month dropped to P8.87 from P10.72 last year and P9.44 in August.

But Beltran reiterated the risk to inflation posed by the prolonged dry spell due to the El Niño weather phenomenon.

“It is important that the gains in taming food inflation not be undermined by the impending El Niño,” Beltran said.

“Measures should also be in place to address the adverse effects the dry spell would inflict on agricultural production and hydroelectric power generation. These may include repair and construction of irrigation systems and farm-to-market roads, early importation of rice, cloud seeding operations and water conservation campaigns,” Beltran added.

In this regard, the National Economic and Development Authority (Neda) will complete the Roadmap to Address the Impact of El Niño or “Rain” this month, its director general, Arsenio M. Balisacan, earlier said.

“The objective [of Rain] is to mitigate the impact of El Niño on food supply, ensure stability of food prices and provide assistance to farmers and households in adversely affected areas,” Balisacan, who is also economic planning secretary, had told the Inquirer.

“The preparation and implementation of the roadmap involve the various agencies of government. Neda will monitor its implementation and regularly report to the President the progress of implementation and results,” he said.