Headline inflation accelerated to 4.4 percent in July, its fastest pace in nine months, the Philippine Statistics Authority (PSA) reported on Tuesday.
Last month’s inflation number represented a notable increase over the 3.7 percent recorded in June, but still within the Bangko Sentral ng Pilipinas’ (BSP) forecast of 4 to 4.8 percent, the agency noted.
“The increase was primarily driven by higher inflation in both food and non-food items, with notable upticks in housing prices, utilities, fuel, meat, corn, and fruits,” PSA said in a statement.
While the July inflation figure was lower than the 4.7 percent recorded in the same period in July 2023, it’s the highest inflation rate since November 2023 at 4.1 percent.
“The latest inflation outturn is consistent with the BSP’s latest assessment that inflation will temporarily settle above the target range in July 2024 due mainly to higher electricity rates and positive base effects but will likely follow a general downtrend beginning in August 2024,” the BSP said in a separate statement.
“The balance of risks to the inflation outlook has shifted to the downside for 2024 and 2025 due largely to the impact of the lower import tariff on rice under Executive Order (EO) 62 (Series of 2024),” the monetary regulator added.
Nonetheless, BSP said higher prices of food items other than rice, and higher transport and electricity charges continue to pose upside risks to inflation.
“The Monetary Board will consider the latest inflation outturn as well as the Q2 2024 national accounts in its assessment of the inflation outlook and the balance of risks in the August 2024 monetary policy meeting,” the BSP further added.
Meanwhile, The National Economic and Development Authority (NEDA) said in a separate statement assured the public that the government is implementing crucial interventions to support the most vulnerable sectors and ensure food security amid the ongoing La Niña phenomenon and the higher inflation recorded in July 2024.
“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,” NEDA Secretary Arsenio M. Balisacan said. He added that the weather phenomenon is expected to persist until the first quarter of 2025.
According to the PSA, food inflation rose to 6.7 percent in July 2024 from 6.5 percent in June 2024. This increase was attributed to higher inflation rates for meat (4.8 percent from 3.1 percent), corn (17.5 percent from 13.1 percent), fruits (8.4 percent from 5.6 percent), eggs and other dairy products (1.8 percent from 1.3 percent), and ready-made food products (6 percent from 5.9 percent. On the other hand, fish (-0.8 percent from -1.4 percent) and sugar (-3.4 percent from -3 percent) recorded softer deflation.
Under non-food items, transportation inflation registered 3.6 percent in July 2024, up from 3.1 percent in June. This increase was driven by increasing global petroleum prices due to the unexpected large withdrawals of United States gasoline stocks, optimistic fuel demand forecasts, and the ongoing geopolitical tension in the Middle East.
For his part, Finance Secretary Ralph G. Recto has assured the public that the inflation rate in July is likely a one-time uptick due to high base effects and is expected to temper and fall within target for the rest of the year as government interventions take full effect.
“Inflation rate is expected to stabilize and fall within target for the rest of the year as the impact of government interventions, particularly the reduced rice tariffs, will be more pronounced starting this August. Although, we might see slight increases in vegetable prices due to damages brought by Typhoon Carina in the agriculture sector,” he said in a statement.
Recto also noted that despite the overall increase in price pressures, rice inflation slowed down to 20.9 percent in July from 22.5 percent in June driven by a month-on-month reduction in the retail price of milled, well-milled, and special rice.
The finance chief further assured the public that the decline in retail prices of rice will become more apparent in the coming months as the volume of rice imports at lower tariff is anticipated to increase and augment local supply.
The DOF also pointed out other factors that will potentially reduce price pressures, including the President’s recent ban on Philippine Offshore Gaming Operations (POGOs), which is expected to lower the demand for housing rentals and office spaces, thereby helping temper rental prices.
Additionally, to mitigate the effects of the uptick in electricity prices, the Energy Regulatory Commission (ERC) has ordered the staggered implementation of charges from Wholesale Electricity Spot Market (WESM) purchases in June over four equal monthly installments from June up to September 2024.
Moreover, to lessen the impact of food and non-food inflation on the vulnerable sector, the government continues to provide fuel and cash subsidies, with a proposed increase in the budget for ayudas such as cash allowances for the Pantawid Pamilyang Pilipino Program (4Ps) in the 2025 national budget.
This increases the total cash grant for all the schemes under the 4Ps to PHP 3,550 from PHP 2,850.
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