Inflation picks up pace in October with higher food, transport prices

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Metro Manila (CNN Philippines, November 5) — Prices of basic goods climbed faster in October ​led by food and public transport, the Philippine Statistics Authority reported on Thursday.

Inflation logged in at 2.5%, rising from September's 2.3% and the 0.8% recorded in October 2019. ​This is the fastest increase since July, which also ended a two-month streak of decelerating price adjustments.

National Statistician Dennis Mapa reported faster increases in the cost of meat and fish, and with vegetable prices slowly returning to normal. ​In particular, pork prices fattened up by 29% in Metro Manila amid supply concerns due to the African swine fever. The growth is softer in the provinces at 12%, although Mapa pointed out that areas in Luzon are more affected by price adjustments in the capital.

Overall prices of meat grew by 4.7%.

Transport costs maintained their ascent, with tricycle fares zooming by 45.8% and jeepney fares accelerating by 6.4%. Mapa said the average minimum tricycle fare is now at ₱14.25 from ₱11 a year ago, a trend seen since government allowed such vehicles to return to roads but with just one passenger per trip.

Buses also charged 4.1% higher as more public utility vehicles were allowed to ferry passengers as authorities relaxed quarantine rules.

Consumers also had to spend more on getting a haircut, with barbershops charging 7.6% more than their rates a year ago. Mapa said this reflected additional costs to do business, such as the provision of protective gear and disinfection activities amid the COVID-19 pandemic.

Higher tuition fees charged by private high schools, colleges, universities, and other tertiary institutions also contributed to monthly inflation, the PSA said, although the 1.2% increase is quite modest compared to September's 1% uptick.

READ: Private schools urged to impose reasonable tuition, miscellaneous fees amid pandemic

Restaurants also charged more for meals, with prices up by 2.1%, the PSA said. The cost of personal hygiene materials, which includes rubbing alcohol and toothpaste, went up by 2.8%.

On the other hand, slower inflation was logged for alcoholic drinks and cigarettes, clothing, housing expenses and utilities, and health-related items.

Costs incurred for recreation and culture dropped from last year, as most establishments remain shuttered or on limited operations amid the COVID-19 crisis.

Inflation tracks the price movements of basic goods like food and fuel. Authorities want to keep price increases between 2-4%, a trend sustained since last year.

The Bangko Sentral ng Pilipinas earlier pegged price climbs between 1.9-2.7%, citing higher electricity rates and some food price increases due to recent typhoons that disrupted production and harvests.

However, the country's poorest households felt the price increases more as inflation for the bottom 30% income earners clocked in at 2.9%, mainly for their food, education, as well as clothing and footwear needs.

​Bicol again logged the fastest inflation among regions with a 4.1% pace, although slower than the 4.5% increase the previous month. Mapa said this does not yet include the impact of Typhoons Quinta and Rolly which ravaged provinces last week.

"Ang malaking contribution sa inflation for Bicol Region ay 'yung transport index, na nasa 37.4%. Ang pinanggalingan nito ay 'yung tricycle fares na may 123% inflation, so more than double (from a year ago) [The biggest contributor to inflation in the Bicol region is the transport index at 37.4%. This is mainly due to tricycle fares with a 123% inflation, meaning it more than doubled (from a year ago)]," he said during a media briefing.

Jeepney fares in Bicol surged by a third while bus fares are up 16.1%.

Inflation was at the same pace in Metro Manila and in the provinces, although rice prices surged in most parts of Luzon amid limited supply of regular and well-milled rice, the PSA official said. However, fancier rice variants saw prices slip with more than enough supply in the market.

Rice is 0.8% cheaper in the regions compared to October 2019 rates but is 1.9% costlier within Metro Manila, data showed.

RELATED: Rice stocks down 1% in September

Since the start of the year, prices have risen by 2.5% – well within the central bank's 2-4% target range for 2020. BSP Governor Benjamin Diokno said the outturn is within expectations of a "favorable" inflation environment.

ING Bank economist Nicholas Antonio Mapa pointed out that inflation will stay low more because of "depressed economic conditions," as the country remains in recession due to the pandemic.