Producer inflation posts mild increase in November

PHOTOS FROM AFP

MANILA, Philippines — Factory gate prices snapped 10 consecutive months of contraction to post a mild growth in November 2024, benefiting consumers and helping keep the right conditions for the rate-cutting phase of the Bangko Sentral ng Pilipinas (BSP).

A monthly survey of manufacturers showed the producer price index (PPI) — a measure of the average change in factory gate prices over time — grew by 0.3 year-on-year, the Philippine Statistics Authority (PSA) reported on Friday.

Data showed the latest reading marked the first growth in the PPI since December 2023, when producer price inflation inched up by 0.6 percent. That brought the 11-month average PPI last year to -0.8 percent.

Dissecting the PSA’s report, the slight increase in the PPI during the month was due to a faster increase recorded by computer, electronic, and optical products sold at factory gate prices. Such commodities registered a faster producer price growth of 3.1 percent in November, from the 2.1-percent uptick in the preceding month.

Other main contributors to the uptrend of the PPI in November were the acceleration of factory gate prices of transport equipment at 2.1 percent, and food products at 2.4 percent.

Overall, 11 sectors exhibited annual increases in producer prices, while eight posted decreases during the month.

The mild increase in factory gate prices in November was expected amid the typical surge in demand ahead of the holiday season. The powerful typhoons that hit the country late in the season might have also caused supply problems for factories.

Latest data from the PSA showed the country’s headline inflation slightly picked up to 2.5 percent in November. The mild acceleration in the CPI and a slower-than-expected economic growth in the previous quarter had prompted the BSP to close 2024 with a third quarter-point rate cut, with Governor Eli Remolona Jr. hinting at additional easing moves next year.

State statisticians will report the December and full-year 2024 inflation data on Jan. 7. As it is, the BSP expected inflation to have settled between 2.3 and 3.1 percent in the final month of last year, with the average price growth for the entire 2024 seen at 3.2 percent.

If realized, that would mark the first target-consistent annual inflation reading since 2020, when a pandemic-induced recession sapped overall demand and tempered consumer price increases.