Inflation last month settled at 2.3 percent, mainly due to higher prices of food and non-alcoholic drinks, the Philippine Statistics Authority (PSA) reported Tuesday.

October inflation was faster than the 1.9 percent recorded in September. Still, the latest inflation level fell within the 2 to 4 percent target of the Bangko Sentral ng Pilipinas (BSP).

Prices of food and non-alcoholic drinks rose to 2.9 percent from 1.4 percent.

Specifically, rice prices grew to 9.6 percent from 5.7 percent year-on-year. However, compared to last month, prices of the commodity declined.

PSA National Statistician and Civil Registrar Dennis Mapa said the average price of regular rice fell to P50.22 per kilo from P50.47 per kilo. Meanwhile, well-milled rice cost less at P55.28 per kilo from P55.51 per kilo.

Lower tariff on imported rice

These figures came after the government in July started implementing a lower tariff on imported rice at 15 percent from 35 percent.

Mapa attributed the year-on-year growth to the base effects, which made the new figure much higher after an unusually low level recorded in a certain period.

Last year, President Ferdinand Marcos Jr. ordered a price cap for regular rice at P41 per kilo and for well-milled rice at P45 per kilo after the commodity’s prices spiked up to P60 per kilo. “We think that rice prices have peaked. The growth in October is just a blip,” Mapa said.

In September, rice prices fell to 5.7 percent from 14.7 percent, bringing the overall inflation to 1.9 percent during that month.

National Economic and Development Authority Secretary Arsenio Balisacan said prices of other food items increased due to recent bad weather.

Significant challenges

“Recent weather disturbances, including typhoon “Kristine,” have posed significant challenges to our food supply and logistics,” he said.

“Looking ahead, adverse weather conditions in recent months may put some strain on food supply, possibly affecting vegetable prices,” Bank of the Philippine Islands chief economist Jun Neri said.

However, he said overall inflation will likely remain within the BSP target of 2 to 4 percent in the next 12 months as global commodity supplies remain stable.

Core inflation, which excludes volatile items like food and fuel, stabilized at 2.4 percent year-on-year based on PSA data.

“Contributing to this stability is China’s economic slowdown, which has dampened the demand for oil,” Neri said.

In a statement on Tuesday, BSP said possible inflation growth drivers include electricity rates and higher minimum wages in areas outside Metro Manila.

In its monetary policy meeting on 16 October, BSP forecasted inflation to hit 3.3 percent, down from its initial estimate of 3.1 percent announced in August.

For next year, the central bank projects higher inflation at 3.3 percent from 2.9 percent.

Lower interest rates

Neri said the BSP might further ease its 6 percent policy rate to private banks in December due to manageable local inflation outlook.