Q3 inflation at 2% on higher prices of rice, housing rental

Consumer prices rose by a third at 2.0 percent in the third quarter of 2016, from 1.5 percent in April to June, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, GMA News reported.

"The lean supply season in the rice production as well as weather-related supply disruption of key food items pushed up food prices," the central bank said.

Non-food inflation also rose on higher prices of clothing and footwear, housing rentals, as well as health, restaurant, and catering services.

Nicholas Antonio Mapa, economist at the Bank of the Philippine Islands, said inflation figures are "crucial for a country that is dependent on consumption as it acts as a tax on purchasing power."

"Every P100 earned by an individual is said to be 'taxed' by inflation as it tends to diminish one's purchasing power, or ability to secure goods and services," Mapa noted.

Lower inflation tends to help boost consumption by preserving purchasing power, he added.

Core inflation, which excludes certain volatile food and energy items, reached 2.0 percent from 1.7 percent.

For the first three quarters of the year, the average inflation increased hit 1.6 percent, compared to the government's target of 3.0 percent ± 1.0 percentage point for 2016 to 2018.

"Prevailing conditions for inflation and output continue to support keeping monetary policy settings steady. Keeping a steady hand on policy levers also remains prudent given the challenging global economic environment and uncertainty over growth prospects and monetary policy action in major advanced economies," the central bank said.