Overall inflation eases to 3.7% in June, but food prices still rising fast

MANILA, Philippines — Inflation in the Philippines decelerated to 3.7% in June from 3.9% in May, according to data released Friday by the Philippine Statistics Authority.

The slowdown was primarily driven by lower energy and transportation costs, providing some relief to consumers after four consecutive months of rising prices.

The inflation rate, which measures the pace of increase in the prices of goods and services, has been a key concern for policymakers and consumers alike.

The June figure brings the year-to-date average inflation to 3.5%, keeping it within the central bank's target range of 2% to 4% for the year.

A significant factor contributing to the inflation slowdown was the sharper deflation in electricity prices, which fell 13.7% in June compared to an 8.5% decline in May, PSA Undersecretary Claire Mapa said at a briefing Friday.

This sector's inflation rate declined from 0.9% in May to 0.1% last month.

“Ang nag-contribute sa substantial overall inflation ay ang reduction ng price of electricity (The substantial reduction in the inflation rate was largely contributed by the decrease in electricity prices.),” Mapa said.

This led to a reduction in the housing and utilities inflation rate to 0.1% from 0.9% over the same period. Deflation refers to a decrease in the general price level of goods and services.

On June 17, power dsitributor Manila Electric Co. (Meralco) reduced its power rates by P1.9623 per kilowatt-hour (kWh) instead of the previously announced increase of P0.6436.

READ: Meralco rates down this month

The reduction, however, was only observed within the National Capital Region and that the impact on electricity inflation was not felt by consumers outside the region.

“Another factor is transport. Mababa ang presyo ng gasolina (Gasoline prices have gone down),” he added.

Within sectors

Transportation costs also played a role in easing inflationary pressures. The sector's inflation rate decelerated to 3.1% last month from 3.5% in May, primarily due to lower inflation rates for personal transport and gasoline. The decrease followed additional rollbacks in gasoline prices in early June.

Inflation in the restaurants and accommodation services sector, meanwhile, eased from 5.3% in the previous month to 5.1% in June.

Not all sectors, however, saw a slowdown in price increases.

Food inflation, which tracks the movement of food prices commonly purchased by households, rose to 6.5% in June from 6.1% in May.

This was mainly driven by higher prices for vegetables and meat, as supply was affected by the onset of the rainy season and a rise in African swine fever cases, respectively.

Inflation in the food and non-alcoholic beverages sector also rose from 5.8% in May to 6.1% in June, driven by the faster year-on-year price increases in vegetables, tubers, plantains, cooking bananas, and pulses.

Mapa explained that this sector has the largest weight in the consumer price index (CPI) basket, attributed to the significant share of corn, meat, and vegetables.

“Basically you have the meat plus vegetables plus corn increases, [but] the meat and vegetables are the highest,” he said.

Rice inflation also slightly increased from 23% in the previous month to 22.5% in June.

According to the Department of Agriculture (DA) price monitoring, the latest average on rice per kilo during the last week of June varied depending on the commodity type.

Local well-milled rice had an average price of P51.5, regular milled stood at P49.03 and special rice at P49.03.

Meat like whole chicken costed around P194.51 while liempo at P381.85 per kilo.

A kilo of tomatoes by the end of the month averaged at P129.73, red onions at P108.02 and imported and native garlic stood at a range of P155.98 to P425, respectively.