September inflation balloons to 6.1%, raising 9M inflation average to 6.6%

The Philippine Statistics Authority (PSA) [link] released its consumer price index (CPI) data for September, which revealed that headline inflation had risen to 6.1%, up from 5.3% in August. Core inflation fell to 5.9% from 6.1%. The result was just within the upper bound of the BSP’s expected range of 5.3% to 6.1%. The main driver of the increase was the cost of rice, with “rice inflation” at 17.9% in September. The raw CPI score for September was P123.90 for the same basket of goods and services which could have been purchased for P100.00 in 2018.

MB bottom-line: This was another surprise to the upside, and it’s hard to find a silver lining in this mess of data that shows prices climbing while the economy sputters. The GDP debacle was caused by government underspending, and the inflation is being caused by our government’s mishandling of the supply-side issues that have plagued basic food commodities for over a year. While I’m sure this recent result will have many calling for the BSP to raise rates again to keep inflation under control, the price of rice isn’t going up because there’s an excess of money in the system bidding for a normal amount of rice. The problem isn’t demand. People need to eat. The price of rice is going up because the supply of rice is insufficient to support the demand that has always been there. From my perspective, all the data points toward the government. 

-

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.