Inflation eases; food still biggest price hike driver

MANILA, Philippines — The country’s inflation rate eased for the sixth consecutive month in July to its lowest level in 16 months, driven by slower increases in utility and food costs, according to the Philippine Statistics Authority (PSA).

National Statistician Dennis Mapa, at a briefing yesterday, said inflation or the rate of increase in prices of goods and services slowed to 4.7 percent in July from 5.4 percent in June this year, and 6.4 percent in July last year.

The July inflation reading is the lowest since the 4.0 percent in March last year.

It is also within the Bangko Sentral ng Pilipinas (BSP)’s July inflation forecast of 4.1 to 4.9 percent.

Mapa said the continued downtrend in inflation in July was primarily driven by the slower increase in housing, water, electricity, gas and other fuels at 4.5 percent during the month from 5.6 percent in June.

Also driving the lower July inflation rate is the food and non-alcoholic beverages commodity group. It posted a slower uptick of 6.3 percent in July from the previous month’s 6.7 percent, although the sector still accounted for the highest share in the inflation rate.

Food inflation alone slowed to 6.3 percent in July from 6.7 in June.

The slower food inflation rate was primarily due to the decline in meat and other parts of slaughtered land animals at -1.7 percent in July from the previous month’s 0.3 percent, fish and other seafood (4.5 percent from 6.2 percent); and sugar, confectionery and desserts (21.4 percent from 28.9 percent).

Lower inflation rates were also noted in other food items such as flour, bread and other bakery products, pasta products and other cereals at 10.1 percent in July from 11 percent in June; milk, other dairy products and eggs (9.7 percent from 11.2 percent), oils and fats (two percent from 5.6 percent), fruits and nuts (8.4 percent from 11.4 percent) and ready-made food and other food products not elsewhere classified (7.8 percent from 8.5 percent).

The PSA cited transport as the third main source of the lower inflation rate in July, as the commodity group registered a faster decline of -4.7 percent during the month from -3.1 percent in June.

Core inflation, which strips off volatile food and energy items, also slowed to 6.7 percent in July from 7.4 percent in June.

From January to July, inflation averaged 6.8 percent and remained above the BSP’s two to four percent target range.

The BSP in a statement yesterday said the latest inflation print is in line with its assessment that inflation will return to the target range by the fourth quarter of the year, barring further supply shocks.

To meet the two to four percent inflation target by the end of the year, National Economic and Development Authority Secretary Arsenio Balisacan said the government is monitoring the supply and demand situation for key commodities.

“While we continue to experience a downtrend in inflation, we need to be vigilant, especially as we face increasingly volatile weather disturbances as well as external headwinds such as oil price increases and trade restrictions on food,” Mapa said.

He said the recent typhoons are seen to have impact on vegetable prices.

“If you look at past periods when there was a typhoon, normally, there are spikes in prices of vegetables and we will have to check on that in August,” he said.

Apart from vegetables, he said the PSA is also monitoring rice prices, which have been increasing and could pose a threat to the downtrend in inflation.

To ensure that the current weather disturbances will not have a lingering impact on inflation and the economy for the rest of the year, Balisacan said the government is deploying resources to affected areas and fine-tuning on-the-ground response.

“The government will implement necessary measures to prevent price spikes, protect the purchasing power of Filipino families and sustain our economic recovery and momentum,” he said.