Two indices, one month

Headline inflation in the Philippines eased to 6.1 per cent in August from 6.2 per cent in July, inside the 5.5 per cent to 6.5 per cent range the central bank BSP had projected. Food and non-alcoholic beverages slowed to 4.6 per cent from 5.2 per cent, and housing, water, electricity, gas and other fuels to 7.9 per cent from 8.2 per cent. Metro Manila came in at 4.1 per cent against 4.4 per cent, and areas outside it at 6.6 per cent against 6.7 per cent.[1]

In the index for the bottom 30 per cent of income households the rate did not move: 8.2 per cent in August, the same as in July. Inside that basket the food line eased to 8.0 per cent from 8.3 per cent, while housing, water, electricity, gas and other fuels rose to 10.3 per cent from 10.1 per cent and transport to 15.3 per cent from 14.2 per cent.[1]

Where the easing came from

In the all-household index the food line carried the month, falling 0.6 points, while the housing and utilities line fell 0.3 points. In the index for the poorest 30 per cent the same food line fell 0.3 points, and the two lines that answer to fuel and utility costs went the other way. That pattern points at a supply component doing the work rather than at a broad compression of demand, though the two indices weight different baskets, so one month's difference can also reflect the weights.[1]

Two days ago this column split a headline the same way, but by component: at the Bank of Canada a 3 per cent headline carried by gasoline sat over a core close to 2 per cent. Here the split runs between households instead, and the instrument question returns in a sharper form. A policy rate reaches spending that credit finances; the housing, water, electricity, gas and other fuels line and the transport line move on cost, and those are the lines still rising for the poorest 30 per cent.[1], [2]

The gap to watch

The measurable thing here is the distance between the two rates, 6.1 per cent against 8.2 per cent. If the transport line and the housing, water, electricity, gas and other fuels line in the index for the poorest 30 per cent keep rising while the all-household headline keeps falling, that distance widens through the end of 2026. The monthly release carries both rates, so the check needs no extra series.[1]