AS expected, higher food prices in the wake of  typhoons Ondoy and Pepeng have caused inflation to inch up to 1.6 percent in October, according to the latest data released by the National Statistics Office (NSO) on Thursday.

The food, beverage and tobacco (FBT) index in the Philippines posted the highest inflation rate at 3.7 percent in October. Inflation for FBT was at 2.2 percent in September and 15 percent in October 2008.

The NSO said inflation for food alone climbed to 3.8 percent in October, from 2.1 percent in September. Inflation for food in October 2008 was at 15.6 percent.

The most notable increase in food prices was observed in fruits and vegetables, which posted a higher inflation rate of 9.6 percent in October from 1.5 percent in September. Inflation for fruits and vegetables a year ago was at 14.1 percent.

“The limited supply of vegetables in the markets, as roads from vegetable-supplying provinces were not passable due to landslides and road cuts, caused their prices to accelerate during the month,” the NSO said.  

“Higher prices of selected fruits were also posted in many regions including NCR. All these factors raised the index of fruits and vegetables in the three areas in October: Philippines, 8.4 percent from 2.1 percent; National Capital Region (NCR), 21.1 percent from 4.4 percent; and Areas Outside the National Capital Region (AONCR), 4.5 percent from 1.5 percent,” it added.   

National Economic and Development Authority (Neda) Acting Director General Augusto  Santos, in a statement, cited data from the Bureau of Agricultural Statistics  showing prices of amargoso, cabbage, Baguio beans and eggplant rising more than 50 percent from their September prices.

Director Dennis  Arroyo of Neda’s National Planning and Policy Staff said that vegetable prices like eggplant increased by 90.5 percent from September to October; Baguio beans, 56.4 percent; cabbage, 67.6 percent; and amargoso, 69.8 percent.

However, Santos said the average inflation rate of 3.2 percent for the first 10 months of 2009 is still within the Development Budget Coordination Committee  forecast of 2.5 percent to 4.5 percent for this year.

Arroyo said that while rice prices rose to 0.8 percent in October from -1.9 percent in September, this did not affect inflation that much.

Arroyo explained that the National Food Authority’s rice inventory is good for 34 days and the country’s commercial rice inventory is for 65 days. These, he said, prevented any drastic rice-price increases.

He said, however, that the government is now closely monitoring any possible price hike in rice, as a drought in India could affect global rice prices.

Nonetheless, Arroyo said this is still being monitored and any rice supply tightening could readily be addressed by importing from sources like Vietnam.

“This is still a potential threat. This is something we are watching out for,” Arroyo said in a phone interview.
    The NSO said that inflation for the month of October was higher than the 0.7 percent posted in September 2009 but remained below last year’s inflation figure of 11.2 percent.
    Excluding selected food and energy items, core inflation continued to register a slower rate of 2.7 percent in October from 2.8 percent in September.

Slower annual price increases were registered in the indexes of clothing and miscellaneous items at 2 percent from 2.1 percent; while that for housing and repairs (H&R) items remained at 2.1 percent.

Further, the NSO said the indexes of fuel, light and water and services still recorded negative annual rates at -3.6 percent and -2.2 percent, respectively, from their corresponding last month’s rates of -3.4 percent and -3.1 percent.

The annual inflation rate in the NCR went up to 1.1 percent in October from -0.3 percent in September due to the acceleration in the inflation rates of FBT and H&R index.

Annual inflation rate in AONCR increased to 1.9 percent in October from 1.1 percent in September. This can be attributed to higher annual price increment posted in the index of FBT.