Chemical costs fuel factory price surge in January

Factory gate prices rose at a faster pace at the start of 2025, driven by a relatively sharper increase in chemical product prices, the Philippine Statistics Authority (PSA) reported.

Preliminary data from the PSA revealed that the producer price index (PPI), which reflects the year-on-year increase in prices of manufactured goods, accelerated by a faster 0.8 percent in January than in December 2024, which posted only 0.1 percent.

This higher producers' inflation likewise reversed the slight deflation of 1.1 percent in January of last year.

The PSA said in a March 4 statement that the production of chemical products was the leading driver to the faster annual rate of PPI for manufactured goods. Its inflation climbed to 2.4 percent in January from the 1.4 percent in December 2024.

The chemical and chemical products sector accounted for 30.3 percent of the increase in the manufacturing PPI’s annual price growth in January. It holds the sixth-largest weight in the PPI calculation among the 22 manufacturing industry divisions it covers.

Additionally, the higher inflation in the manufacturing industry was also driven by faster price hikes in coke and refined petroleum products, and a rebound in rubber and plastic product prices.

Of the 19 other industry divisions, 13 recorded annual price gains, while six posted declines.

While chemical production sped up overall inflation, the manufacture of computer, electronic, and optical products remained the biggest contributor to the annual growth of manufacturing PPI in January. This industry led the year-on-year increase in producer prices, accelerating by 3.3 percent, although unchanged from the December 2024 rate.

Food price decline

Prices of manufactured food products dropped slightly, by 0.1 percent in January, reversing the 1.7 percent rise in December 2024.

This price decline also reversed the one-percent inflation seen in January of last year.

"Manufacturing of other food products was the main contributor to the downtrend in the annual rate of PPI for food manufacturing," the PSA said, noting the declines in half of its eight industry groups.

The other food products sector saw slower price growth, while fish, seafood, and dairy prices continued to decline, but at a moderate pace in January.

Meanwhile, vegetable and animal oil and fats saw a faster price increase of 12.8 percent from 12 percent in the previous month.