Inflation eases to 3.6% in September

Philippine inflation eased in September after a seven-month high in August as price increases in garments, utilities and services decelerated.

Documents from the National Statistics Office (NSO) showed that annual inflation came in at 3.6 percent in September, a slowdown from August’s 3.8 percent.

The latest inflation figure was also an improvement from the year-ago rate of 4.7 percent.

The average inflation from January to September stood at 3.2 percent, near the low end of the government’s 3- to 5- percent target for 2012.

Inflation in Metro Manila settled at 3.5 percent in September from the revised 4.4 percent in August as slower price gains were seen in food, non-alcoholic beverages, utilities, recreation and culture.

Annual inflation in areas outside Metro Manila, however, went up to 3.7 percent in September from 3.6 percent in August as an uptick was noted in food, non-alcoholic beverages, transport, communication, recreation and culture.

Excluding selected food and energy items, core inflation for the whole country eased to 3.8 percent in September from 4.3 percent in August.

“Contributing also to the downtrend were the price decreases in food items such as fish, cooking oil and common species and seasonings seen in many regions together with the price declines in vegetables in NCR,” the NSO added.

“The September inflation rate of 3.6 percent should give some sense of relief for policymakers,” said Benjamin Diokno of the University of Philippines School of Economics.

He said the full-year inflation rate would likely be in the neighborhood of 3.2 percent, approaching the lower bound of the official inflation forecast.

“This should provide more confidence for the BSP to cut interest rates by another 25 basis points,” Diokno said, adding that the interest rate cut should be complemented by a stronger fiscal response.

“Public spending, specially for public infrastructure, should be accelerated. State spending for public infrastructure appears impressive simply because it is being compared to a sharp decline in infrastructure spending last year,” he added.