Headline inflation in the Philippines slowed to 3.3 percent in August 2024, its slowest pace since January this year, as increases in the prices of rice, other food items as well as the cost of transport and cooking gas eased, the Philippine Statistics Authority said Thursday.
The decline in August follows a 4.4 percent inflation rate in July and a 5.3 percent rate in August last year. Economic Planning Undersecretary and National Statistician Dennis Mapa highlighted that the deceleration in rice prices, which account for 8.9 percent of the consumer basket, is a key factor.
The inflation rate for rice dropped to 14.7 percent in August from 20.9 percent in July. Mapa attributed this decrease to the base effect and the recent government decision to lower tariffs on imported rice. “We hope to see bigger drops in the coming months,” he said, indicating further potential for easing.
Core inflation, which excludes volatile food and energy items, also showed improvement, slowing to 2.6 percent in August from 2.9 percent in July and 6.1 percent in the same month last year.
The lower core inflation rate, combined with an average headline inflation of 3.6 percent for the first eight months of the year, provides the Bangko Sentral ng Pilipinas with additional room to consider easing interest rates at its next monetary policy meeting.
Earlier this month, BSP cut overnight rates by 25 basis points to 6.25 percent and indicated further easing if inflation declines further.
The BSP is scheduled to hold two more monetary policy meetings this year—on Oct. 17 and Dec. 19.Despite these positive trends, Mapa acknowledged that risks to the inflation outlook remain.
However, he said the PSA is projecting inflation will likely continue to ease in the coming months, especially as the reduction on tariff on imported rice starts to take full effect.
For the bottom 30 percent of income households, inflation also decelerated to 4.7 percent in August from 5.8 percent in July and 5.6 percent in August of the previous year.
This group allocates 17.9 percent of their spending to rice, making fluctuations in its price particularly impactful on their overall cost of living.
Overall, the recent inflation data reflects a positive shift towards greater price stability, benefiting both the broader economy and lower-income households.
The government and monetary authorities will be closely monitoring these trends as they plan future economic policies.
