Almost beating expectations, the country’s headline inflation rate eased to 3.3% in August from the 4.4% in July, which is within the government’s target of 2% to 4%.

The Philippine Statistics Authority (PSA) said that the August inflation rate brings the year-to-date average to 3.6%, still within the government’s target.

“This brings the national average inflation from January to August 2024 to 3.6%. In August 2023, the inflation rate was higher at 5.3%,” the PSA said.

One of the biggest factors for the decrease in the August inflation was rice inflation, which went down to 14.7% from the 20.9% in July. However, the inflation index for housing, water, electricity, gas and other fuels exhibited a higher annual increase of 3.8% during the month from 2.3% percent in July 2024.

According to the PSA, the downtrend in the inflation in August was primarily from the slower annual increment of food and non-alcoholic beverages at 3.9% in August 2024 from 6.4% in the previous month.

“Also contributing to the downtrend was transport with an annual drop of 0.2 percent during the month from a 3.6 percent annual increase in July 2024,” it added.

Lower annual increments were also noted in the indices of the following commodity groups during the month: Alcoholic beverages and tobacco, 3.3% from 3.4%; clothing and footwear, 3% from 3.1%; restaurants and accommodation services, 4.6% from 4.9%; and personal care, and miscellaneous goods and services, 3% from 3.2%.

Food Inflation eases

The PSA said food inflation at the national level eased to 4.2% in August 2024 from 6.7% in the previous month. In August 2023, food inflation was higher at 8.2%.

“The deceleration of food inflation in August 2024 was primarily brought about by the slower inflation rate of rice with 14.7% in August 2024 from 20.9% percent in the previous month. This was followed by vegetables, tubers, plantains, cooking bananas and pulses with a year-on-year decline of 4.3% during the month from 6.1% annual increase in July 2024,” the PSA said.

The August inflation rate was in line with the forecast of the Bangko Sentral ng Pilipinas (BSP) of 3.2% to 4%.

“Higher electricity rates and higher prices for agricultural commodities, owing to unfavorable weather conditions, are the primary sources of upward price pressures for the month,” the BSP said in a statement last week.

The BSP said, however, these are expected to be offset by lower domestic oil prices as well as lower rice, fish, and meat prices along with the peso appreciation.

“Going forward, the Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment,” it said.

(Image from PSA)