Inflation rises to 4-year high at 6.9% in September as food, energy costs surge

Metro Manila (CNN Philippines, October 5) — Inflation accelerated further in September to 6.9% — its highest rate in four years — with food items again leading the increase in prices, the Philippine Statistics Authority (PSA) said Wednesday.

The last time inflation hit the same rate was in September and October 2018 amid the rice crisis, said PSA chief Dennis Mapa. The next highest pace would be 7.2% in February 2009, he added.

September's figure also fell within the 6.6-7.4% range pegged by the Bangko Sentral ng Pilipinas (BSP) for the month.

Year-to-date inflation is now at 5.1%, further above the central bank's 2-4% target band for 2022.

Vegetables, fish, and sugar primarily contributed to food inflation, which accelerated to 7.4% in September from 6.3% the month prior.

The housing, water, electricity, gas, and other fuels basket was the second top driver with a 7.3% inflation rate. Electricity, rentals, and wood fuel mainly pushed up inflation for this commodity basket.

Restaurants and accommodation services again contributed to the faster increase in commodity prices in September, with the group logging a 4.6% rate itself.

However, core inflation, which excludes food and energy items given their price volatility, eased slightly to 4.5% during the month from August's 4.6%.

The National Capital Region recorded a 6.5% pace in September, breaching its 5.7% rate in the previous month.

Meanwhile, areas outside NCR (AONCR) saw inflation zoom to 7% from 6.5% in August.

Zamboanga Peninsula and Davao Region logged the fastest inflation rate in AONCR at 9.6%.

Cagayan Valley and Calabarzon had the slowest pace at 5.9%. The Bangsamoro Autonomous Region of Muslim Mindanao, usually the region with the lowest rate, came in second at 6%.

All regions outside NCR except Eastern Visayas recorded faster inflation in September.

The country's poorest households likewise saw quicker inflation during the month at 6.7%, compared to 5.9% in August. This brought average inflation for the bottom 30% income households to 4.6%.

While this income group still uses 2012 as base year, Mapa said its rebasing to 2018 will be up for the PSA Board's approval this November.

Will inflation stay high?

While Mapa said he cannot definitely say whether inflation will go beyond 7% especially with the holidays approaching, he noted an uptrend in food inflation, an inflation heavyweight, during the past months.

Any increase in this commodity basket will also affect the restaurants and accommodation services group, said Mapa, adding that the public should also keep an eye out for transport inflation.

"Reducing inflation would really mean reducing food inflation. That really is one of the reasons why inflation went up not just nationwide but also even the regional inflation," explained Mapa in a mix of English and Filipino.

In a separate statement, the National Economic and Development Authority (NEDA) stressed the importance of helping farmers and fisherfolk deal with higher prices of fuel and agricultural inputs through fuel discounts and cash aid.

“Today’s inflation is far more complex than what we have seen in recent decades. The government and its stakeholders need to collaborate for shared solutions,” said NEDA chief Arsenio Balisacan.

“In the near-term, ensuring sufficient food supply, while assisting the most vulnerable sectors will help us hurdle the current challenges,” he added.

The BSP likewise assured the public it is "prepared to take further policy actions" to bring inflation back to target over the medium term.

It has so far hiked the key interest rate by 225 basis points since May, bringing it to 4.25%.