EXPENSIVE rice and fuel as well as weather disturbances, among other factors, may have led to faster inflation in August 2023, according to the Bangko Sentral ng Pilipinas (BSP).
In its month-ahead inflation forecast, BSP expects inflation to average 4.8 to 5.6 percent in August 2023. Inflation slowed to 4.7 percent in July from a peak of 8.7 percent in January 2023.
The Philippine Statistics Authority (PSA) earlier warned that rice may again be the cause of higher inflation in the coming months as data showed prices returned to levels that were seen prior to the implementation of a law that sought to bring down the price of the staple.
“Higher prices of rice and other agricultural commodities due to weather disturbances, sharp rise in fuel prices as well as increased transport costs owing to higher train fares and toll rates, and the peso depreciation are the primary sources of upward price pressures in August,” BSP said.
PSA data showed rice inflation averaged 4.2 percent in July 2023, the highest since February 2019 when the increase in the commodity’s prices was at 4.5 percent. The Rice Trade Liberalization (RTL) Act was implemented in March 2019. (Full story here: https://businessmirror.com.ph/2023/08/04/rice-price-hike-may-dampen-momentum-to-tame-inflation/)
The Department of Agriculture (DA) earlier said rice and corn, the two most important staples in the country, suffered the brunt of typhoon Egay. The typhoon affected 67,528 metric tons (MT) of rice valued at P3 billion, while corn losses reached 124,576 MT valued at P2.3 billion.
“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data dependent approach to monetary policy formulation,” BSP said.
However, BSP noted that lower electricity rates from major providers could contribute to downward price pressures for the month.
This was the case in July when the PSA noted that slower year-on-year increase in housing, water, electricity, gas and other fuels at 4.5 percent during the month from 5.6 percent in June 2023 eased inflation pressures.
Other factors that helped cool inflation was the slower increase in the heavily-weighted food and non-alcoholic beverages at 6.3 percent in July 2023, from 6.7 percent in the previous month.
The third main source of deceleration was transport, recording a faster annual decrease of 4.7 percent in July from a contraction of 3.1 percent in June 2023.
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