Prices of commodities remain stable for 2010

The National Economic and Development Authority (NEDA) is expecting that prices of commodities would remain stable this year as the inflation rate registered the lowest in September.

For the first eight months of the year, the monthly inflation rate ranged from 3.9 to 4.4 percent, while the average inflation rate from January to September was 4.1 percent.

Socioeconomic Planning Sec. Cayetano Paderanga, Jr. said that the lower generation charges of electricity contributed to the benign September inflation.

“The fall in electricity prices by 4.4 percent in September relative to the previous month could have contributed greatly to the decline in September consumer prices,” Paderanga said..

Citing figures from the Manila Electric Company (MERALCO), Paderanga said that the generation charge in September was lower by PhP0.684 per kilowatt hour compared to August due to lower cost of purchases from the Wholesale Electricity Spot Market.

Paderanga also noted the significant decrease in the prices of rice, corn, meat, fruits and vegetables, and transportation and communication in September as major contributors to the low inflation rate.

Paderanga expects that the impact on inflation for the rest of the year will still be minimal even with the increasing price of wheat in the world market

The Technical Committee on Tariff and Related Matters (TCTRM) has endorsed to the Cabinet-level Committee on Tariff and Related Matters (CTRM) a draft Executive Order that would extend the
zero duty on milling wheat for another six months.

This will mitigate any drastic increase in the local prices of flour and bakery products, even those of substitutes, such as rice, Paderanga said.

While price adjustments in ASEAN countries have been stable this year, Paderanga said that central banks in the region continue to be vigilant in preventing undue rise in inflation.

“The Bank of Thailand increased its policy rate by 25 basis points in August since it expected inflation to rise next year with economic expansion and rising costs of production.”

“Likewise, the Bank Negara Malaysia increased its policy rates by 25 basis points in July on the expectation that prices will rise together with continued improvement in domestic economic conditions and possible adjustments in administered prices,” said Paderanga.

“The Monetary Authority of Singapore also imposed a tighter monetary policy, but the Bank of Indonesia and the Bangko Sentral ng Pilipinas continued to maintain their policy rate levels since lowering them in the midst of the global economic crisis,” he added.