Summary Inflation Report Consumer

Price Index (2012=100): May 2019

Reference Number: 
2019-090
Release Date: 
Wednesday, June 5, 2019
YEAR-ON-YEAR

cc

The rest of the commodity groups retained their previous month’s annual
rates (see Tables 3 and 4).

Excluding selected food and energy items, core inflation, likewise, picked
up by 3.5 percent in May 2019. Core inflation in the previous month was
registered at 3.4 percent, while in May 2018, it was 3.6 percent (see Table
9).

For the country’s food index, inflation accelerated by 3.2 percent in May
2019. Its previous month’s annual change was 2.9 percent, and in May 2018,
5.5 percent (see Table 7).

Compared with their previous month’s annual rates, the following food

groups exhibited higher annual mark-ups during the month:

 Other cereals, flours, cereal preparation, bread, pasta and other

bakery products, 3.7%;
 Fish, 4.2%;
 Fruits, 4.6%;
 Vegetables, 12.5%; and
 Food products, not elsewhere classified, 6.8%.

Meanwhile, the indices of rice and corn registered annual declines of 0.7
percent and 2.8 percent, respectively. Except for the index of milk, cheese
and egg which retained its previous month’s annual rate of 2.6 percent, the
rest of the food groups recorded slower annual increments during the month
(see Table 5).

National Capital Region (NCR)

Similarly, inflation in NCR was higher at 3.4 percent in May 2019. Its annual
rate was observed at 3.1 percent in April 2019 and 4.9 percent in May 2018.
This was attributed to higher annual increases posted in the indices of food
and non-alcoholic beverages at 4.2 percent; and housing, water, electricity,
gas, and other fuels at 3.1 percent.

Meanwhile, slower annual hikes were registered in the indices of the

following commdoity groups:

 Alcoholic beverages and tobacco, 3.0 %;

 Furnishing, household equipment and routine maintenance of the
house, 1.6 %;
 Health, 4.6%;
 Transport, 5.4%; and
 Restaurant and miscellaneous goods and services, 3.3%.

Other commodity groups retained their previous month’s annual rates (see
Tables 3 and 4).

Areas Outside NCR (AONCR)

Following the same trend, inflation in AONCR accelerated by 3.1 percent in
May 2019. In the previous month, inflation in the area was noted at 3.0
percent, and in May 2018, 4.6 percent.

Annual increase during the month was higher in recreation and culture index
at 3.4 percent. Slower annual mark-ups were, however, observed in the
indices of the following commodity groups:

 Alcoholic beverages and tobacco, 10.7%;

 Health, 3.3%;
 Transport, 3.0%; and
 Restaurant and miscellaneous goods and services, 3.2%.

The rest of the commodity groups retained their previous month’s annual
rates (see Tables 3 and 4).

Eight regions in AONCR exhibited higher inflation in May 2019. The highest
annual inflation among the regions in AONCR remained in MIMAROPA Region
at 4.7 percent, while the lowest during the month was observed in Region
VII (Central Visayas) and Region IX (Zamboanga Peninsula), both at 1.5
percent (see Table 4).

Oct. inflation slowest in 3-1/2 years

November 6, 2019 | 12:32 am

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The government is monitoring price movements amid the Asian swine fever onslaught as consumers
have been shifting to chicken and other pork substitutes -- REUTERS
By Luz Wendy T. Noble

THE OVERALL rise in prices of widely used goods eased for the fifth straight
month to its slowest pace in nearly three-and-a-half years in October, the
Philippine Statistics Authority (PSA) reported on Tuesday, citing year-on-year
drops for the heavily weighted food and non-alcoholic beverages,
transportation and utilities.

At the same time, some regions saw an uptick in food prices as people sought
pork substitutes amid the African Swine Fever (ASF) onslaught.
October saw headline inflation slow further to 0.8% from September’s 0.9% —
thus marking the second straight month of below-one percent inflation — and
the 6.7% a year ago that was sustained from September and was a nine-year
peak.

October’s reading was the slowest since April 2016’s 0.7%.

“The downtrend in inflation in October 2019 was primarily due to the annual
drop in the index of the heavily weighted food and non-alcoholic beverages,”
PSA Undersecretary Dennis S. Mapa said in a briefing in Quezon City.

He added that the decline in the indices for transport, housing, water,
electricity, gas and other fuels also pulled inflation further down.

Last month’s pace also landed in the lower half of the Bangko Sentral ng
Pilipinas’ (BSP) 0.5-1.3% estimate for the month and matched the median
in BusinessWorld’s poll of 14 economists.

The most recent data brought year-to-date inflation to 2.6%, well within the
central bank’s 2-4% target range for the whole of 2019 though still higher than
an official 2.5% forecast full-year average.

Stripping out volatile prices of food and energy yielded a 2.6% core inflation in
October that eased from September’s 2.7% and the year-ago 4.9%. Year-to-
date core inflation clocked in at 3.3%.

Headline inflation in Metro Manila, however, was higher than the national rate
at 1.3%, picking up from September’s 0.9% though slower than October
2018’s 6.1%. Other regions where inflation topped the national average were
Cordillera Administrative Region (1.2%), Central Luzon (2.3%), Cavite-
Laguna-Batangas-Rizal-Quezon (1.4%), Occidental and Oriental Mindoro-
Marinduque-Romblon-Palawan (1.1%), Western Visayas (1.1%) and the
Autonomous Region in Muslim Mindanao (one percent).

“The latest inflation outturn remains consistent with the BSP’s prevailing
assessment of a benign inflation outlook, with average inflation still expected
to firmly settle within the government’s target range…” BSP said in a
statement Tuesday.

Mr. Mapa noted that prices of pork substitutes have risen amid the ASF
outbreak. “Generally, ‘yung prices ng chicken ay tumataas, ‘yung beef din and
‘yung pork pababa. Inflation on egg, milk and cheese… pataas na siya nung
nakaraang apat na buwan (Generally, prices of chicken and beef rose, while
price of pork went down. Inflation on egg, milk and cheese has been picking
up in the past four months),” he said.

According to National Economic and Development Authority Officer-in-Charge

and Undersecretary for Regional Development Adoracion M. Navarro, the
government is monitoring the outbreak’s price impact. “The livestock industry
in the said ASF-stricken areas, which accounts for 21.7% of the country’s total
hog production last year, remains at high risk. The government and private
companies must collaborate to manage, contain and control the spread of the
disease,” Ms. Navarro said in a statement on Tuesday.

Analysts think that inflation has already bottomed out as base effects may
have worn off. “Base effects played a major role in forcing the heading print
below one percent for a second straight month in 2019 with heavyweights
food and transport posting deflation… But with the base effects from the peak
of 2018 fading quickly, we expect inflation to revert to target as early as
December,” ING-NV Manila Senior Economist Nicholas Antonio T. Mapa said
in a note to reporters.

Security Bank Corp. Chief Economist Robert Dan J. Roces said in a separate
e-mail to reporters: “We expect inflation to have bottomed out in October and
start to pick up this November on dissipating base effects and higher
consumer spending for the holidays.”

Receding inflation since last year’s multi-year peaks has enabled the central
bank to partially dial back 2018’s 175 cumulative basis point increase in
benchmark interest rates by a total of 75 bps in three moves to 3.5% for
overnight deposit, four percent for the reverse repurchase facility and 4.5% for
overnight lending.

The BSP has also cut banks’ reserve requirement ratio four times this year by
a total of 400 basis points (bps) to 14% for universal and commercial lenders
and four percent for thrift banks starting December. In the latest RRR easing
last month, the reserve ratio of rural banks that will go down to three percent
in November was left untouched.

Governor Benjamin E. Diokno told Bloomberg and ABS-CBN News Channel

on Monday that monetary authorities are done with policy easing for the year.

“We think the BSP’s signaled pause on monetary easing for the year is
prudent; and with just 75bps slashed from 2018’s 175bps rate hike leaves the
central bank ample policy leeway to manage any inflationary spikes in 2020, if
at all,” ING’s Mr. Mapa said.
 Philippines
0.38
43RD OF 126
ECON COMPLEXITY

1980

2017

$99B
37TH OF 221
EXPORTS

1980

2017

$105B
32ND OF 221
IMPORTS

1980

2017

$8.34K
119TH OF 214
GDP PER CAPITA

1990

2017

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IMPORTER  EXPORTER


Visualizations
 Exports
 Imports
 Trade Balance
 Destinations
 Origins
 Product Space
 Complexity and Income Inequality
 Economic Complexity Ranking

The Philippines is the 37th largest export economy in the world and the 43rd
most complex economy according to the Economic Complexity Index (ECI). In
2017, the Philippines exported $99B and imported $105B, resulting in a
negative trade balance of $5.9B. In 2017 the GDP of the Philippines was $313B
and its GDP per capita was $8.34k.

The top exports of the Philippines are Integrated Circuits ($32.2B), Office

Machine Parts ($10B), Computers ($5.19B), Semiconductor Devices ($3.34B)
and Insulated Wire ($2.42B), using the 1992 revision of the HS (Harmonized
System) classification. Its top imports are Integrated
Circuits ($12.1B), Refined Petroleum ($5.64B), Cars ($4.77B), Crude
Petroleum ($3.15B) and Industrial Printers ($2.5B).
The top export destinations of the Philippines are China ($20B), Hong
Kong ($14.8B), the United States ($13B), Japan ($11.4B) and Germany
($5.3B). The top import origins are China($21.9B), Japan ($11.6B), South
Korea ($8.74B), the United States ($8.34B) and Thailand ($7B).
The Philippines is an island and
borders China, Indonesia, Japan, Malaysia, Taiwan, Vietnam and Palau by
sea.

Exports
In 2017 the Philippines exported $99B, making it the 37th largest exporter in
the world. During the last five years the exports of the Philippines have
increased at an annualized rate of 5.9%, from $73.7B in 2012 to $99B in 2017.
The most recent exports are led by Integrated Circuits which represent 32.4%
of the total exports of the Philippines, followed by Office Machine Parts, which
account for 10%.

Imports
In 2017 the Philippines imported $105B, making it the 32nd largest importer in
the world. During the last five years the imports of the Philippines have
increased at an annualized rate of 7%, from $74.6B in 2012 to $105B in 2017.
The most recent imports are led by Integrated Circuits which represent 11.5%
of the total imports of the Philippines, followed by Refined Petroleum, which
account for 5.36%.

Trade Balance
As of 2017 the Philippines had a negative trade balance of $5.9B in net imports.
As compared to their trade balance in 1995 when they still had a negative trade
balance of $6.34B in net imports.

Destinations
The top export destinations of the Philippines are China ($20B), Hong
Kong ($14.8B), the United States  ($13B), Japan ($11.4B)
and Germany ($5.3B).

Origins
The top import origins of the Philippines
are China ($21.9B), Japan ($11.6B), South Korea ($8.74B), the United
States ($8.34B) and Thailand ($7B).

ECOWhat Causes Inflation?

Economists wake up in the morning hoping for a chance to debate the causes of
inflation.  While there is no one cause universally agreed upon, below are three
generally accepted reasons for inflation to increase.

 Demand outweighs Supply.  When demand for goods and services increases at a
faster rate than the supply, you have inflation. If it is harder to get something,
those who sell that product or service are able to increase the price.  Shortages
may occur as a result of a natural disaster. This creates a temporary scarcity as
people scramble to purchase the limited supply of goods, causing the prices to
skyrocket.

 Increased Costs.  Inflation can also occur when manufacturers and

businesses raise prices due to an increase in their production costs.  Raw
materials, transport expenses, or rising labor costs are potential factors.  For
example, when talent is scarce, businesses are required to pay higher wages,
to attract and retain their workers.  Companies pass these costs on to
 customers via higher prices.

 Too Much Money.   Another cause is the expansion of the money supply. 
When this occurs, it creates a situation where the ability to pay more causes
prices to increase. The money supply is not just cash, but also credit cards,
personal loans, mortgages, and investments.  When there is more money to
spend, the price of just about everything will increase, even though neither
demand nor supply has changed. NOMI


Is Inflation Bad?


Almost everyone thinks inflation is evil, but that’s not necessarily true. Mild
inflation, in the range of 2%, is good for the economy, because it can promote
consumption without destroying the value of people's savings. As long as
inflation stays within limits, it could actually benefit economic growth. If you
know the cost of something will go up slightly in the future, you'll be more
likely to purchase it now. As people spend, businesses invest in more
inventories and hire more people who in turn spend more.  If this effect is
mild, savings rates are maintained at an acceptable level. Likewise, increased
company revenue can result in increased company stock value.

On the other hand, runaway inflation is a devastating condition. When prices

rise faster than wages, a consumer’s standard of living drops because goods
become expensive. In this type of environment, manufacturing slows down,
workers are laid off, and a downward spiral of the economy begins.  In this
environment, a company’s stock value would tend to decrease.

Summary
Inflation per se is not bad. Mild inflation is actually good for the growth of the
overall economy. However, inflation is a problem when it becomes too high or too
low.  Extreme inflation may impact your investment portfolio and, in turn, your
future financial security. 

Does the government benefit from inflation?

The key benefit of inflation is that it reduces the real value of government debt.
It does this because tax revenues increase approximately in proportion
to inflation. Government's fixed debt payments therefore become a smaller part of the
tax take and more affordable.

Inflation essentially prods people to not hoard money because idle money loses value over
time. This pressure forces people to put their money to productive ends and in the process
help money circulate in the economy. Inflation makes markets more liquid and assets less
static.


 C COMPLEXITY OF THE PHILIPPINES

The product space is a network connecting products that are likely to be co-
exported and can be used to predict the evolution of a country’s export
structure.

The economy of the Philippines has an Economic Complexity Index (ECI) of

0.381 making it the 43rd most complex country. the Philippines exports 160
products with revealed comparative advantage (meaning that its share of
global exports is larger than what would be expected from the size of its export
economy and from the size of a product’s global market).