(UPDATE) SLOWER increases in electricity and fuel prices, as well as transport costs, led to a lower inflation rate last month, the Philippine Statistics Authority (PSA) reported on Friday.
Consumer price growth dropped to 3.7 percent in June, snapping four straight months of increases at 3.9 percent in May. The rate is also markedly lower than the 5.4 percent in the same month last year.
Core inflation, which excludes volatile food and energy items, remained at 3.1 percent, lower than the 7.4 percent a year earlier.
It is well within the 3.4- to 4.2-percent estimate of the Bangko Sentral ng Pilipinas (BSP) for the month and lower than the 3.9-percent median in a Manila Times poll of economists.
Rates also remained within the BSP’s 2.0- to 4.0-percent target for the seventh straight month.
While the outlook has improved, the BSP noted that rising prices of food items, transportation costs, and electricity rates continue to pose inflationary risks.
It said the Monetary Board supports the government’s effort to reduce the tariff on rice imports “to address supply-side pressures on prices and sustain the disinflation process.”
The BSP “will ensure that monetary policy settings remain in line with its primary mandate to safeguard price stability conducive to sustainable economic growth,” it added.
Average inflation remained within target at 3.5 percent. The central bank said inflation expectations remained well-anchored, with full-year inflation expected to be within target for 2024 and 2025.
The PSA attributed the downtrend in overall inflation in June to “the slower annual increment of housing, water, electricity, gas and other fuels at 0.1 percent during the month from 0.9 percent in May 2024.”
Slower increases in transport (3.1 percent from 3.5 percent) and restaurants and accommodation services (5.1 percent from 5.3 percent) also contributed to the decline.
Food and alcoholic beverages still accounted for over half — 61.9 percent share or 2.3 percentage points — of overall inflation.
Food inflation, however, rose to 6.5 percent in June from the previous month’s 6.1 percent.
The PSA attributed the rise to a faster year-on-year increase in the prices of vegetables, tubers, plantains, cooking bananas and pulses, which jumped to 7.2 percent in June 2024 from 2.7 percent in May.
The index for meat and other parts of slaughtered land animals also contributed to the uptrend, with an inflation rate of 3.1 percent in June, up from 1.6 percent in the previous month.
Rice inflation, which contributed to the uptick in inflation from the previous months, meanwhile, declined further to 22.5 percent last month from 23.0 percent in May.
National Statistician Undersecretary Claire Dennis Mapa said that the downturn in inflation is still uncertain.
“Our data signals are not yet very clear,” he told reporters. “In July, we observed that in the first week, fuel prices increased. Additionally, we had adjustments in electricity rates, and food prices, particularly meat and vegetables, also went up.”
“We do not yet see a clear downward trend, given that there are other factors to consider, such as changes in electricity prices and increases in oil and LPG prices,” Mapa said.
Socioeconomic Planning Secretary Arsenio Balisacan assured that the government is committed to keep rates within 3.0 to 4.0 percent.
“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,” Balisacan said.
Speaker Ferdinand Martin Romualdez believes that the Marcos administration could help further ease inflation by reducing power rates through amendments to the Electric Power Industry Reform Act (Epira).
In a statement, Romualdez said the administration of President Ferdinand Marcos Jr. has controlled inflation through sound economic policies, which were achieved despite global supply chain disruptions and financial instabilities in significant economies.
He said the House of Representatives aims to further bring down electricity rates through the proposed amendments to the Epira law, which, he said, the chamber would try to finish before Congress goes on Christmas recess.
Romualdez said that the amendment of the Epira would be preceded by an inquiry into the energy situation.
“We want to know what is the problem with the law, why the law that was supposed to streamline the energy sector has unfortunately brought up electricity rates. We will call all stakeholders — power producers and distributors, the transmission company, and, most importantly, the consumers represented by consumer groups,” he said.
Romualdez was also elated when rice inflation declined, noting that the administration is trying to bring down rice prices by selling directly to consumers through Kadiwa stores and subsidies.
Over the long term, the House would support farmers with farm inputs, implements, infrastructure, and other forms of assistance to encourage them to increase their produce, he said.
The Marcos administration has also strengthened local production by supporting the agriculture and manufacturing sectors, reducing import dependency and stabilizing essential goods’ prices.
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