Inflation eases to 3.7% in June

MANILA, Philippines —  Inflation eased in June to its lowest level in four months, driven by the slower uptick in energy and transport costs, according to the Philippine Statistics Authority (PSA).

In a press briefing yesterday, National Statistician Dennis Mapa said headline inflation – the rate of increase in the average prices of consumer goods and services commonly purchased by households –slowed to 3.7 percent in June from 3.9 percent in May and 5.4 percent in June 2023.

The latest inflation print is the slowest in four months or since the 3.4 percent in February this year.

It is also within the Bangko Sentral ng Pilipinas (BSP)‘s forecast range of 3.4 to 4.2 percent for the month.

The PSA attributed the downtrend in overall inflation to the slower increase in housing, water, electricity, gas and other fuels commodity group, at 0.1 percent in June from 0.9 percent in the previous month.

This developed as electricity posted a sharper deflation at -13.7 percent in June from -8.5 percent in May.

Also contributing to the lower June inflation was the transport commodity group, which went up at a slower pace of 3.1 percent in June from 3.5 percent in May.

The restaurants and accommodation services commodity group was cited as another main driver of the lower inflation as it registered a slower uptick of 5.1 percent in June from 5.3 percent in the previous month.

While overall inflation eased in June, the National Economic and Development Authority (NEDA) said that rising food prices remain a concern as food inflation accelerated to 6.5 percent in June from 6.1 percent in May, driven by higher prices of vegetables and meat.

In particular, vegetables recorded an inflation rate of 7.2 percent in June, up from 2.7 percent in May,  with the onset of the rainy season affecting supply.

Meat prices registered 3.1 percent inflation in June compared to the previous month’s 1.6 percent.

While rice inflation slowed, it remained high at 22.5 percent in June from 23 percent in May.

Core inflation, which excludes selected food and energy items, remained at 3.1 percent in June.

From January to June, inflation averaged 3.5 percent, within the BSP’s two to four percent target for the year.

Mapa said it is not yet clear, based on data if the downtrend in inflation in June would continue in the coming months.

NEDA Secretary Arsenio Balisacan said the government remains committed to keeping inflation within two to four percent this year.

“We will continue to work closely with the government, stakeholders, and other priority sectors to implement necessary measures to ensure that the country will have a sufficient and affordable food supply – including rice – for every Filipino,” he said.

The BSP said balance of risks to the inflation outlook has shifted to the downside for 2024 and 2025 due largely to the impact of reduced  tariffs on rice imports under Executive Order 62.

However, higher prices of food items other than rice, transport charges and electricity rates continue to pose upside risks to inflation.

The BSP said the Monetary Board supports the implementation of the lowering of tariff on rice imports to address supply-side pressures on prices and sustain the disinflation process.

“Moving forward, the BSP will ensure that monetary policy settings remain in line with its primary mandate to safeguard price stability conducive to sustainable economic growth,” the central bank said.

For his part, Speaker Martin Romualdez said the House of Representatives would work to further reduce the cost of electricity and rice prices to tame inflation.

“We will work to further reduce electricity rates and rice prices. Accomplishing that will surely lead to a further moderation of inflation,” Romualdez said.

According to Romualdez, inflation eased “amidst ongoing global challenges, including supply chain disruptions and financial instabilities in significant economies.”

Albay Rep. Joey Salceda said inflation remains under control but the country could still “do better.”

“As usual, it’s about rice, but we are looking more at year-on-year effects now, rather than continuing momentum of price increases. In other words, it’s not getting worse,” Salceda said.

Salceda, who chairs the House committee on ways and means, said the programs of the administration to “reduce tariffs on rice and boost agricultural production will yield results in the figures for next month.” – Sheila Crisostomo