Philippine inflation rate slows down to 2.8%


Call it the “Arroyo legacy,” credit “Aquinomics,” or simply attribute it to good market fundamentals, but there are more and more reasons now to say that it is indeed more fun in the Philippines — compared to other countries.

Recently Philippine stocks are on new all-time highs, with the market index rising 30% year to date.

The country’s Gross Domestic Product (GDP) has also surged by 7.1% as of the 3rd quarter of 2012, making the Philippines the fastest-growing country in Southeast Asia.

And now, the National Statistics Office (NSO) has announced that the Philippines’ inflation rate has decelerated to 2.8% as of November 2012, the third consecutive month this year that the inflation rate went down.

The country’s year to date inflation is now 3.2%, still below the government’s year to date target of 3.3%.

This 2.8% headline inflation rate was a sharp decline from the 4.8% inflation registered in the same period in 2011, and a further easing in from the 3.1% inflation rate in October 2012.

The Philippines’ comparative monthly inflation rates in 2011 and in 2012 are shown below.

Inflation is the percentage change in overall prices between two periods as measured by a price index. Simply put, a 2.8% inflation rate means that a product costing P100 before is now selling at P102.80.

According to the NSO, the country’s low inflation “resulted from the deceleration in the annual growths posted in the indices of food and non-alcoholic beverages; housing, water, electricity, gas and other fuels; and transport.”

Analysts are saying, however, that inflationary pressure may occur by December 2012.

With increasing domestic demand due to the Christmas season, prices of commodities may rise weeks before the holidays. Inflation may also rise due to temporary but sharp increases in prices of agricultural products resulting from disruptions in supply caused by superstorm Pablo (Typhoon Bopha) that ravaged Mindanao.

Still, the Philippine government believes the country’s inflation rate in 2012 will stay within the lower range of the full-year inflation target of 3-5%.

Graph source: Trading Economics

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