Inflation slightly up in June

MANILA, Philippines - Inflation slightly accelerated in June after holding steady for the previous two months, but the central bank believed consumer prices have remained largely manageable for the first half of the year.

Prices of basic goods and services rose 2.8 percent in June, picking up from 2.6 percent in May and April, which was a 13-month low, the National Statistics Office (NSO) reported yesterday

“This was due to higher annual increments in the indices for alcoholic beverages and tobacco, health, transport, recreation and culture, and education,” the government statistics office said.

Excluding food and oil prices, core inflation settled at 2.9 percent, slightly losing pace from three percent during similar periods.

The Bangko Sentral ng Pilipinas (BSP) welcomed the latest inflation report, which fell within its two to 2.9-percent forecast for the month.

The month’s result “supports our assessment of manageable inflation and the appropriateness of our current policy stance,” BSP Governor Amando Tetangco Jr. said in a text message to reporters.

For the first half of the year, consumer prices rose by an average of 2.9 percent, which is below the central bank’s three to five-percent target range for the year. Last year, inflation averaged 3.2 percent.

According to the NSO, the opening of classes in June that saw “tuition fee hikes” contributed to upward pressure in inflation last month. There were a total of 1,237 public and private schools that raised fees this school year, according to government data.

The education index posted inflation of 4.5 percent, up from 4.4 percent in May, NSO data showed.

In addition, inflation in the alcoholic beverages and tobacco and health indices inched up to 31.2 percent and 2.8 percent, respectively.

The recreation and culture segment jumped to 2.7 percent from 1.7 percent, while the gauge for transport reversed to 0.7 percent inflation from 0.5 percent deflation.

Meanwhile, slower price increments were recorded in clothing and footwear (3.3 percent from 3.5 percent), furnishing, household equipment and maintenance (3.3 percent from 3.7 percent) and restaurant and miscellaneous goods (2.1 percent from 2.3 percent).

The pace of price increase was kept on heavily-weighted food and non-alcoholic beverages (2.4 percent), housing, water, electricity and gas (1.5 percent), and communication (0.1 percent) indices.

The central bank, Tetangco said, will monitor developments abroad, especially on how other monetary authorities will set their policies, which could affect capital inflows and hence, local inflation.

“We will monitor the impact of these factors on global and domestic investor sentiment and growth dynamics to see if there is any need to adjust our own policy settings,” he explained.