(UPDATES) INFLATION hit a nine-month high in July, the Philippine Statistics Authority (PSA) reported on Tuesday, breaching the 2.0- to 4.0-percent target as utility, housing, fuel and food prices rose.
At 4.4 percent, consumer price growth was the highest since October 2023’s 4.9 percent. It accelerated from 3.7 percent in June but was slower than the year-earlier 4.7 percent.
It hit the midpoint of the Bangko Sentral ng Pilipinas’ (BSP) 4.0-percent to 4.8-percent estimate for the month, but exceeded the market consensus of 4.1 percent.
Core inflation, which excludes volatile food and energy items, slowed to 2.9 percent from 3.1 percent in June and 6.7 percent a year earlier.
Year to date, headline and core inflation averaged 3.7 percent and 3.3 percent, respectively.
The BSP, which last week said that a July breach was likely given higher electricity, food and fuel prices, reiterated that the rate was still expected to go down and return to target.
Risks to the outlook have shifted to the downside, it added, particularly since the government slashed the tariff on rice imports to 15 percent from 35 percent up to 2028.
Rising transport and electricity prices, however, continue to pose upside risks.
“The Monetary Board will consider the latest inflation outturn as well as the Q2 2024 (second quarter of 2024) national accounts in its assessment of the inflation outlook and the balance of risks in the August 2024 monetary policy meeting,” the central bank said.
“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.”
Monetary authorities are scheduled to meet on August 15 to decide whether or not to start cutting key interest rates. In addition to the July inflation data, they will also consider second-quarter growth results the PSA will release on Thursday.
Peak likely hit
Inflation has likely peaked for the year, National Statistician Undersecretary Claire Dennis Mapa said, but risks remain as other commodity prices could still increase.
The PSA, in a statement, said the overall rise in inflation was “primarily influenced by the higher year-on-year increase in the index of housing, water, electricity, gas and other fuels at 2.3 percent during the month from 0.1 percent in June 2024.”
The food and nonalcoholic beverages index also contributed to higher inflation, rising to 6.4 percent from 6.1 percent.
Food and alcoholic beverages still accounted for over half — a 55.5-percent share or 2.4 percentage points — of overall inflation. Food inflation, in particular, rose to 6.7 percent from 6.5 percent in June.
“The acceleration of food inflation in July 2024 was mainly brought about by the year-on-year increase in meat and other parts of slaughtered land animals index at 4.8 percent in July 2024 from 3.1 percent in the previous month,” the PSA said.
“The index of fruits and nuts also contributed to the uptrend with an inflation rate of 8.4 percent during the month from 5.6 percent in June 2024,” it added.
Rice inflation — which drove consumer price growth higher earlier in the year — declined to 20.9 percent from 22.5 percent in June.
Mapa said rice inflation was likely to decline further in the coming months, especially in August, due to base effects.
Food security push
Socioeconomic Planning Secretary Arsenio Balisacan said the government was committed to keeping inflation within 2.0 to 4.0 percent following the July breach.
“The government is relentlessly working to address our nation’s most pressing concern of ensuring food security for every Filipino amid the faster rise in prices in July and the expected typhoons and rains due to the onset of La Niña this August,” he said in a separate statement.
“Our goal now is to sustain this momentum by addressing the constraints to food security and economic development more broadly.”
Balisacan said the government had already prepared for La Niña via initiatives such as a quick response fund, credit facilities and seed stocks. The Department of Agriculture (DA) was said to be expediting the declogging of farm drainage systems and building water-impounding and postharvest facilities.
“To assist farmers in dealing with higher fuel prices, DA will provide around P510 million in fuel subsidies to crop, livestock and poultry farmers,” Balisacan said.
“It is anticipated that around 160,000 farmers will benefit from over P3,000 in fuel assistance between August and September 2024,” he added.
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