Inflation continues to ease in June

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest Newsbriefs, a weekly digest produced by IDEA, Inc. to highlight the most recent national and international economic events, due to a slowdown in the indices of alcoholic beverages and tobacco; water, electricity, gas, and other fuels; transport; and recreation and culture, the country’s headline inflation in June eased by 2.8 percent. The inflation figure recorded for this month is less than the 2.9-percent inflation in May, and significantly lower than the 5.2-percent inflation recorded in June 2011. Headline inflation in the National Capital Region (NCR) was at 2.2 percent, whereas inflation in areas outside NCR had a 3.0-percent inflation in June.

Inflation for the month of June continued to ease, giving the central bank more room to keep policy rates steady. Headline inflation eased by 2.8 percent, less than May’s 2.9-percent inflation, and significantly lower than the 5.2-percent inflation recorded in June 2011. Bangko Sentral ng Pilipinas (BSP) governor Amando Tetangco, Jr. said that the BSP would remain vigilant, particularly of the developments in the Middle East that would affect domestic growth.

Furthermore according to IDEA, the effect of higher food prices and steeper electricity rates may have been offset by the continued fuel price drops, resulting in a lower inflation in June. Dubai crude oil prices fell to US$94.75 per barrel from US$107.33 per barrel in the previous month. Consequently, local pump prices have been rolled back 15 times during the past year. Other than fuel prices, favorable economic prospects and a stronger peso may have also contributed to the easing of inflation in June.

Likewise per same published report, Asian Development Bank (ADB) Country Director Neeraj Jain said on Monday that ADB would most likely raise their economic growth forecasts for the Philippines to be released in September, taking into account the higher-than-expected 6.4 percent first-quarter growth, improved investor sentiments, recent rating upgrade, and fiscal gains. The last growth forecasts released by ADB is at 4.8 percent, below the government’s 5 to 6 percent growth target.

On the other hand, the United Nations Conference on Trade and Development (UNCTAD) warned that the Philippines is not maximizing its potential in attracting foreign direct investments (FDI), in spite of its growing investment potential. FDI flows have fallen short of expectations, with UNCTAD stating that FDI may drop to US$420 billion in 2012.

Lastly, according to a poll by Social Weather Stations, the country’s unemployment rate has declined after hitting a record high earlier this year. The poll, conducted on May 24 to 27, reported an unemployment rate of 26.6 percent, equivalent to roughly 10.9 million adults. This result is down from the figures recorded in March, with a 34.4 percent unemployment rate. While this is a welcome news, unemployment figures have yet to temper and have constantly stayed above the 20-percent mark since May 2005 according to the researchers of IDEA.

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