Headline inflation drops to 4.9% in October 2023, lower than BSP inflation forecast

Overall inflation in the Philippines dropped to 4.9 percent in October 2023 from 6.1 percent in the previous month, lower than the Bangko Sentral ng Pilipinas (BSP)’s forecast of 5.1 to 5.9 percent.

This brings the year-to-date (YTD) inflation rate to 6.4 percent, closer to the Development Budget Coordination Committee (DBCC) assumption of 5.0 to 6.0 percent for the full year 2023 but above the government’s inflation target of 2-4 percent for the year.

“This positive development is the result of the government’s decisive and timely actions in mitigating inflation, a testament to President Ferdinand R. Marcos, Jr.’s firm resolve to protect the purchasing power of Filipino families,” Finance Secretary Benjamin E. Diokno said.

The downtrend in inflation was mainly due to slower year-on-year (YoY) increases in food and non-alcoholic beverages (7.0 percent) and restaurants and accommodation services (6.3 percent).

Meanwhile, the top three commodity groups that contributed to the October 2023 overall inflation were food and non-alcoholic beverages with 2.6 percentage points (ppt) out of the overall 4.9 percent; restaurants and accommodation services (0.6 ppt); and housing, water, electricity, gas and other fuels (0.6 ppt).

Food inflation, specifically, slowed down to 7.1 percent from 10.0 percent in the previous month, contributing 2.5 ppts to the overall inflation. In the same period a year ago, food inflation was higher at 9.8 percent.

Although rice remains the top contributor to headline inflation at 1.2 ppt with a 13.2-percent inflation rate YoY, it posted a 4.7 ppts decline from the 17.8 percent inflation in the previous month as supply has started to stabilize following the beginning of the harvest season.

Non-food inflation continues to be within the government’s target range of 2-4 percent as it decelerated to 3.4 percent from 3.5 percent the previous month. The main contributors to non-food inflation were food and beverage serving services (0.6 ppt), housing rentals (0.5 ppt), personal care (0.21 ppt), as well as passenger transport (0.16 ppt).

The sustained elevated inflation in restaurants remains partly attributed to the second-round effects of higher prices of