The country's average inflation rate in 2006 slowed down

The annual average Consumer Price Index (CPI) in 2006 was posted at 137.9 for the Philippines, 140.7 for the National Capital Region (NCR) and 136.8 for areas outside NCR (AONCR).

Measured from a year ago, the national average inflation in 2006 decelerated to 6.2 percent from 7.6 percent as all the commodity groups recorded slower average annual growth rates. During the year, lowest inflation rate was in December at 4.3 percent while the highest inflation rate was noted in February and March at 7.6 percent.

The lowest average inflation rate among the commodity groups during the year was registered in clothing and miscellaneous items at 3.0 percent while the highest average inflation was seen in Fuel, Light and Water (FLW) at 12.9 percent. This was, however, slower than its rate of 18.1 percent in 2005. It was in March of the current year that the group’s index registered the highest rate at 18.5 percent.

On selected food items, the biggest national annual average inflation was observed in fruits and vegetables at 8.8 percent, higher by 3.8 percentage points than the 2005 rate. The group’s annual inflation was highest at 11.6 percent in August.

Regional inflation also slowed down with Region VI registering the lowest annual average rate in 2006

Annual average inflation rate in NCR was slower by 1.6 percentage points to 7.0 percent in 2006 from 8.6 percent in 2005. Similarly, annual average inflation in AONCR eased to 6.0 percent from 7.2 percent. The lowest inflation rates in NCR and AONCR were correspondingly observed at 4.9 percent and 4.1 percent in December. Meanwhile, the highest inflation rates in NCR and AONCR during the year were noticed in March at 8.7 percent and 7.2 percent, respectively.

All the regions registered slowdowns in their annual average price movements in 2006 compared to their respective rates last year.

Among the regions, the lowest annual average inflation rate during the year was noted in Region VI (Western Visayas) at 4.6 percent followed by Region XII (SOCCSKSARGEN) at 5.3 percent. The highest annual average inflation rate was however seen in ARMM at 8.8 percent.

By Commodity Group

Slower pace of annual price increases was seen in all the commodity groups

At the national level, the annual inflation rates for all the commodity groups decelerated in 2006 compared to 2005. Annual average inflation rate for food, beverages and tobacco (FBT) slipped to 5.5 percent from 6.4 percent; clothing, 3.0 percent from 3.5 percent; housing and repairs (H&R), 3.9 percent from 4.5 percent; services, 8.9 percent from 11.8 percent; and miscellaneous items, 3.0 percent from 3.2 percent. Among the commodity groups, the annual average inflation for FLW posted the biggest drop of 5.2 percentage points to 12.9 percent in 2006 from 18.1 percent in 2005. This was brought about by the general downward adjustments in the prices of petroleum products.

Food prices generally improved in 2006

The annual price change for rice in the Philippines slackened to 3.7 percent in 2006 from 7.0 percent in 2005. Likewise, annual price increments for rice in NCR and AONCR moved at slower rates of 1.8 percent and 4.0 percent, respectively from their corresponding last year’s rates of 4.0 percent and 7.4 percent. The lowest inflation rate for rice recorded in 2006 was in Region X (Northern Mindanao) at 2.1 percent.

Despite of the occurrence of typhoons (Milenyo, Paeng, Reming and Seniang) in the last months of 2006, the supply of corn was generally sufficient to meet the demand of the consumers. Thus, the annual average inflation for corn decreased in the three areas: Philippines, 4.7 percent from 5.5 percent; NCR, 1.5 percent from 7.4 percent; and AONCR, 4.8 percent from 5.5 percent. Region VI (Western Visayas) had the lowest annual rate of -0.6 percent during the period.

Increases in the prices of cereal preparations such as flour and flour products were generally lower during the year. The group’s index annual inflation rate in the Philippines dropped to 5.9 percent in 2006 from 8.6 percent in 2005; NCR, 6.8 percent from 8.5 percent; and AONCR, 5.6 percent from 8.5 percent.

Slower upward movements in the prices of milk and milk products were also noted in 2006. This resulted to the deceleration of the average inflation rates for the dairy products index in the three areas: Philippines, 6.0 percent in 2006 from 9.9 percent in 2005; NCR, 6.8 percent from 9.6 percent; and AONCR, 5.7 percent from 10.1 percent.

The good catch of fishermen due to favorable weather conditions during the year brought ample supply of fresh fish species in the markets. It slowed down the annual price gains of fish in the markets in NCR by 2.8 percent in 2006 from 4.0 percent in 2005; AONCR, 5.7 percent from 7.3 percent; and at the national level, 5.2 percent from 6.6 percent.

Lower prices of pork in NCR correspondingly effected a slower annual inflation of meat in the area and in the Philippines by 2.6 percent and 2.4 percent from their last year’s inflation of 5.7 percent and 5.9 percent, respectively. Inflation of meat in AONCR was likewise slower at 2.3 percent from 6.1 percent. Both Region VI (Western Visayas) and Region II (Cagayan Valley) recorded the lowest annual average inflation rate of 0.6 percent, with Region VI (Western Visayas) registering the biggest slowdown of 7.3 percentage points (0.6% from 7.9%).

The low production of eggs in NCR particularly during the cold months of January, February and December limited the supply in the markets. This factor primarily contributed to higher annual inflation posted in NCR and in the Philippines at 8.6 percent and 5.6 percent, respectively from their corresponding 2005 rates of -1.1 percent and 3.5 percent. However, slower annual price adjustments of eggs in six regions caused the inflation of its index in AONCR to ease to 4.7 percent from 5.0 percent.

The annual average inflation of fruits and vegetables in the Philippines accelerated to 8.8 percent in 2006 from 5.0 percent in 2005; NCR, 8.6 percent from 2.9 percent; and in AONCR, 9.0 percent from 5.6 percent. This can be attributed to the effects of the four major storms that wrought havoc in some vegetable-producing areas of the country during the months of May, September, October and November. In addition, the insufficient supply of fruits and vegetables in the markets brought about by the floods experienced in the early part of the year and the monsoon rains that prevailed during the months of July and August pushed up prices of fruits and vegetables in the three areas.

Prices of sugar, cooking oil, powdered tonic drinks, coffee and selected spices and seasonings in NCR and AONCR generally picked up during the year. These made the inflation of the miscellaneous foods in the two areas and in the Philippines to move at faster rates of 8.6 percent, 7.4 percent and 7.8 percent, respectively.

Inflation rates for all the commodity groups generally decelerated in all the regions. FLW inflation registered the biggest slowdown.

In 2006, all the regions except for ARMM recorded lower inflation rates in FBT compared to previous year. The lowest annual inflation rate of the group’s index at 4.5 percent was seen in CAR and Region I (Ilocos) while the highest rate was still observed in ARMM at 9.3 percent.

Likewise, upward price movements of clothing items were slower in 2006 as increments in the prices of footwear and selected ready-made apparel generally slowed down. As a result, the annual average inflation rates in the three areas decelerated: Philippines, 3.0 percent from 3.5 percent; NCR, 2.7 percent from 2.9 percent; and AONCR, 3.3 percent from 3.6 percent. The lowest rate posted for the year was in Region X (Northern Mindanao) at 2.2 percent while the highest rate at 5.6 percent was in ARMM.

Movements in the prices of selected construction materials in NCR and in AONCR were correspondingly slower during the year at 4.9 percent and 3.1 percent from last year’s respective figures of 6.4 percent and 3.2 percent. Thus, the housing and repairs (H&R) index at the national level recorded an annual growth rate of 3.9 percent in 2006 from a year ago at 4.5 percent. The lowest rate of 1.2 percent was seen in Region XII (SOCCSKSARGEN) with Caraga recording the biggest slowdown at 3.8 percentage points (1.4 percent from 5.2 percent). On the other hand, annual add-ons in the prices of H&R items were highest in Ilocos and ARMM at 5.9 percent.

Lower charges for electricity rates during the latter part of 2006 and the series of price reductions in LPG and kerosene were noticed in NCR. Thus, the average annual inflation rate of FLW in the area eased to 12.9 percent in 2006 from 28.4 percent in 2005. In AONCR, slower annual inflation was also registered in 10 regions as prices of LPG and kerosene were on the downtrend. The lowest rate of 6.5 percent was recorded in Region VI (Western Visayas) while the highest was in Region I (Ilocos) at 17.7 percent. The inflation of the group’s index in the Philippines decelerated to 12.9 percent from 18.1 percent.

Price rollbacks on petroleum products (gasoline, diesel and engine oil) nationwide along with the implementation of lower jeepney fare in NCR were noted in the latter part of 2006. Similarly, annual increases in the prices of selected school supplies, medicines and other personal services were slower during the year. These factors pulled down the annual inflation of the services index in the area to 10.5 percent from 12.6 percent. In AONCR, the average annual inflation of the services index decelerated to 8.0 percent in 2006 from 11.4 percent last year. This was mainly due to slower increments in the annual charges in some medical, personal, recreational and educational services in many regions. Compared to 2005, all the regions registered lower annual rates during the year. The biggest annual drop of 5.2 percentage points (10.3 percent from 15.5 percent) was noticed in ARMM. Overall, the index moved at a slower pace of 8.9 percent from 11.8 percent.

Slower upward movements in the prices of selected items for household operations, laundry and cleaning supplies and personal care triggered a 0.2 percentage point (2.8% from 3.0%) decrease in the inflation rate for miscellaneous items index in NCR. Likewise, average annual inflation in AONCR was slower by 0.3 percentage point to 3.0 percent in 2006 from 3.3 percent a year ago as nine regions posted slower rates. Sluggish annual growth rates recorded in the price increments of selected furniture, furnishings, personal care, laundry and cleaning supplies and personal effects were noted in many regions. The lowest rate of 2.2 percent was seen in CAR while the highest rate was observed in ARMM at 5.8 percent.