Inflation will likely hit a new low of 0.3 percent this month, although the onslaught of Typhoon ‘Lando’ affecting most of Luzon island these past days could also force prices upward, the Department of Finance’s (DOF) chief economist said on Monday.
‘Inflation rate this October may register another record low. DOF forecasts inflation this month to bottom at 0.3 percent, 0.1-percentage point lower than that of last month. This comes amid lower electricity bills for October, continued low prices of fuel and stabilizing food prices,’ Finance Undersecretary Gil S. Beltran said in an economic bulletin.
In September, the average rate of increase in prices of basic goods further slid to 0.4 percent, the slowest in two decades.
This month, electricity rates dropped by almost a fifth from year-ago levels, while oil prices were also ‘significantly lower’ compared with last year, Beltran noted.
Manila Electric Co.’s (Meralco) rate per kilowatt hour for an average consumption of 300-kilowatts per month dipped to P8.74 this month from P8.87 last month and P10.82 in October last year. Meralco rates have been on the decline for six straight months.
Also, the average price of diesel in Metro Manila among the ‘big three’ oil companies slid to P26.28 a liter from P38.57 a year ago, although a bit higher than September’s P26.10.
Based on the DOF’s calculations, prices of food and non-alcoholic beverages, housing, utilities and fuels, and restaurants and miscellaneous services in October also dropped year-on-year as well as month-on-month.
But Beltran said there remained upward pressures to inflation this month, including the inclement weather and its impact on food production.
‘The realization of a higher actual inflation rate will most likely come from higher-than-forecast fuel prices and higher food prices due to weather disturbances like that of the ongoing Typhoon “Lando,” Beltran explained.
In a separate economic bulletin last week, Beltran said the DOF was backing government plans to import more rice in order to ensure enough supply amid the onslaught of El Nino and keep at bay the risks to inflation due to the prolonged drought.
‘The government should be more aggressive in improving agricultural infrastructure (repair and construction of irrigation systems and farm-to-market roads), importation of rice, cloud seeding operations to sustain ample supply of key food items to counter the effects of El Nino, which threatens to reverse the low inflation environment,’ Beltran said.
The National Economic and Development Authority (Neda) is seeking President Aquino’s go-ahead to import an additional one million metric tons of rice in early 2016 to keep prices stable amid El Nino, which is expected to last until June next year and peak between December and February.