The slowing down of inflation is widely expected to have persisted in July, even while market analysts and retail sector insiders said climactic factors and swings in world crude prices may provoke domestic price pressures anew later in the third quarter.
In an interview on Tuesday, Astro Del Castillo, executive director of the Association of Securities Analysts of the Philippines (ASAP), said the Philippines’ headline inflation in July is likely to register its fifth consecutive month of decline.
However, he explained that recent and upcoming typhoons will be a major factor in deciding whether or not the easing of price pressures will continue until the end of the current quarter.
Del Castillo, who is also the president of First Grade Holdings, said weather disturbances remain an ever-present threat to food production and lower agricultural productivity inevitably translates to higher retail prices.
He said climactic issues and their effect on food supply are not only a local phenomenon as India has recently announced that it may cut its rice exports to ensure sufficient supply to feed its own population.
The veteran market analyst also said production cuts by the Organization of the Petroleum Exporting Countries (OPEC) “can always trigger a chain reaction that leads to higher prices.”
Del Castillo said economic indicators show that the Philippine economy is poised to sustain its upward momentum.
“All the numbers are pointing to continued growth. President (Ferdinand R.) Marcos (Jr.) has declared that the pandemic has ended. There is a renewed focus on infrastructure building. And even international rating agencies are saying that we (Philippines) are likely to be one of the fastest growing economies in Asia,” he added.
Meanwhile, Steven Cua, president, Philippine Amalgamated Supermarkets Association Inc. (PAGASA), told the Philippine News Agency (PNA) that food manufacturers are rolling back the prices of instant noodles.
He described this as a surprising development that may indicate that recent upward price movements may have caused manufacturers’ sales volumes to suffer, and the rollback may be their way of recapturing lost market share.
Cua said food prices remained relatively stable as there were no significant swings in the prices of supermarket items last month.
“In totality, I don’t think there is much room to increase (prices) anyway. If they (manufacturers) continue to increase, they will just lose customers. Some have adapted by reducing the weight of product for the same price in the same packaging. And you have to consider that competition in retail is becoming stiffer with the emergence of more corporate-owned community stores,” he added.
Cua said PAGASA members are set to meet on Wednesday to discuss pricing strategies and the direction their industry is headed in view of contemporary economic realities.*PNA