PHILIPPINE INFLATION EASES TO 3.7% IN JUNE AMID FALLING ENERGY AND TRANSPORT COSTS

MANILA – The headline inflation in the Philippines eased to 3.7 percent in June, down from 3.9 percent in May, driven primarily by declining energy and transport costs, according to the Philippine Statistics Authority (PSA).

In a press briefing, PSA Undersecretary and National Statistician Dennis Mapa noted that inflation in June last year was higher at 5.4 percent. Year-to-date headline inflation stood at 3.5 percent, within the government’s target range of 2 percent to 4 percent.

Mapa attributed the overall decrease in inflation to a slower annual increase in the costs of housing, water, electricity, gas, and other fuels, which saw a minimal rise of 0.1 percent in June compared to 0.9 percent in May. Notably, electricity prices experienced sharper deflation, recording a decrease of -13.7 percent from -8.5 percent in May.

Transport inflation also fell to 3.1 percent from 3.5 percent in May, influenced by lower costs for personal transport and gasoline. The inflation rate for restaurants and accommodation services decreased to 5.1 percent in June from 5.3 percent in May, further contributing to the decline.

However, food inflation increased to 6.5 percent from 6.1 percent in May, driven by rising prices of vegetables, meat, and corn. Despite this, rice inflation saw a slight decrease to 22.5 percent from 23 percent in May, attributed to a reduction in the prices of well-milled rice.

“Medyo may malaki tayong reduction… mga 20 centavos per kilo doon sa well-milled rice kaya may -0.2 percent reduction tayo diyan for that particular commodity kaya nagkaroon tayong slight reduction in the overall inflation. (We have a significant reduction… about 20 centavos per kg. in well-milled rice, which led to a -0.2 percent decrease for that particular commodity, contributing to a slight overall reduction in inflation),” Mapa explained.

The average price per kilogram of well-milled rice fell to PHP55.96 from PHP56.06 in May.

In a statement, the National Economic and Development Authority (NEDA) assured the public of the government’s commitment to addressing rising food prices and ensuring food security.

“We are committed to maintaining the country’s inflation rate within our target range of 3 percent to 4 percent. The easing in our inflation rate in June, primarily due to lower electricity rates, underscores the importance of strengthening our energy sector to sustain our gains,” NEDA Secretary Arsenio Balisacan stated.

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

The Development Budget Coordination Committee (DBCC) has also pledged to implement monetary policy measures and targeted government interventions to address the main drivers of inflation. This includes the new Comprehensive Tariff Program for 2024-2028, aimed at improving the affordability of essential commodities amid rising global prices, and the Food Stamp Program to mitigate the impact of high food prices on vulnerable sectors.

President Ferdinand R. Marcos Jr. recently issued Executive Order (EO) 62, modifying tariff rates on various products to ensure a steady supply of goods and to protect the purchasing power of Filipinos. The rice tariff, in particular, was reduced from 35 percent to 15 percent.

In a separate statement, the Bangko Sentral ng Pilipinas (BSP) confirmed that the June inflation rate of 3.7 percent was within its forecast range of 3.4 percent to 4.2 percent.

“The latest inflation outcome is in line with the BSP’s forecast that inflation will remain within the target range for 2024-2025, with inflation expectations well-anchored,” the BSP stated.

The BSP noted that the risks to the inflation outlook for 2024 and 2025 have shifted to the downside, mainly due to the impact of lower rice import tariffs under EO 62. However, higher prices of food items other than rice, transport charges, and electricity rates continue to pose upside risks to inflation.

The BSP emphasized that the Monetary Board supports the government’s efforts to reduce rice import tariffs to mitigate supply-side pressures on prices and continue the disinflation process.

Moving forward, the BSP will ensure that monetary policy remains aligned with its primary mandate of safeguarding price stability conducive to sustainable economic growth.

(el Amigo/mnm)