Philippines' October inflation at 2.3% (est. 2.4%)

The Philippine Statistics Authority (PSA) [link] revealed that October inflation quickened to 2.3% y/y (up from 1.9% in September), with core inflation (which excludes food and energy prices) at 2.4% y/y (same as September). The Consumer Price Index (CPI) was at P126.5 for October 2024, which is only down 0.08% from the inflationary peak which was P126.6 back in August. 

> Main contributors:  The top three contributors highlighted by the PSA were “food and non-alcoholic beverages” with a 46.9% “share” of the inflation, “housing, water, electricity, gas, and other fuels” with a 22% share of the inflation, and “restaurants and accommodation services” with a 16.1% share of the inflation. So, you know, basically 80% of life. The PSA said that the main driver of the food inflation trend was “faster inflation of rice” at 9.6%, but that the greatest contributor to the food inflation was the “cereals and cereal products” group which had a 78.2% share of the food inflation CPI figure.

> The BSP’s take:  Our central bank was unbothered by the slight uptick in the CPI, and said that the reading was “within the BSP’s forecast range of 2.0 to 2.8 percent”, and is “consistent with the BSP’s assessment that inflation will continue to trend closer to the low end of the target range over the succeeding quarters.” The BSP admitted, however, that the “balance of risks to the outlook for 2025 and 2026 has shifted toward the upside”, particularly due to “potential adjustments in the electricity rates and higher minimum wages in areas outside Metro Manila”. The BSP listed “lower import tariffs on rice” as a “downside factor.” 

MB bottom-line: The monthly inflation figure that we get is the year-on-year change in the CPI for October. It speaks directly to how the current CPI reading relates to the CPI reading back in October of 2023, but it really doesn’t have a lot to say about how last month’s inflation compared to the previous month’s inflation (it’s worse), or how the overall inflation thing is going (not great). Yes, it is true that the CPI readings seem to have basically leveled off, but they haven’t gone down at all. We’ve basically leveled off at the peak. I know you’re all probably tired of hearing me say this, but I still meet people regularly who have this concept of inflation as something that’s going to go away, when instead, it’s more like adding salt to soup. You can change how quickly you add salt (measuring changes in the quickness is what we’re talking about with inflation), but you don’t really get any of the salt that you’ve already added back out of the soup. If you have too much salt in the soup, that’s just what you get. You got salty soup. And because the food line item is spiking higher than the other parts of the CPI, you’re probably going to have to pay something like P450 for that salty soup, too.

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