Slower price hikes for food, alcoholic products cause inflation to ease in July

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By Rose de la Cruz

 

Slower price hikes for food and alcoholic products caused inflation to ease further in July to 2.4 percent, its slowest since December 2016’s 2.2 percent and was the same for July 2017.

 

Headline inflation for July 2019 hit only 2.4 percent year- on- year from 2.7 percent in June. The resulting year-to-date average inflation rate of 3.3 percent remains within the government’s target range of 3 percent ± 1 percentage point for the year.

 

Core inflation, which excludes selected volatile food and energy items to measure underlying price pressures—was lower at 3.2 percent in July from 3.3 percent in June. On a month-on-month seasonally-adjusted basis, inflation was slightly higher at 0.2 percent in July from 0.1 percent in June.

 

Food prices

 

Rice prices continued to decline during the month with the continued arrival of rice imports while  sugar prices also decreased in July compared to year-ago levels. Year-on-year inflation rates for other food items such as vegetables, oils and fats, as well as milk, cheese, and eggs also eased in July.

 

Non-food inflation rate edged higher as the year-on-year inflation rate for education rose driven mostly by base effects following the implementation of the government's free tuition program for the public tertiary level in the previous year. This increase, however, was tempered by the downward adjustment in electricity rates due to lower transmission charges. 

The latest inflation outturn remains consistent with the BSP's prevailing assessment of a manageable inflation outlook over the policy horizon, with average inflation expected to settle within the Government's target range of 3.0 percent ± 1.0 percentage point for 2019 and 2020. 

Looking ahead, the BSP will continue to keep a close watch over latest economic developments to ensure that the monetary policy stance remains consistent with the BSP's price stability objective. 

 

The National Economic and Development Authority expects inflation to settle within the government’s target of 2.0 to 4.0 percent this year as it further slides to its slowest rate in 31 months.

The Philippine Statistics Authority reported today that the country’s headline inflation eased to 2.4 percent in July 2019, bringing the year-to-date inflation to 3.3 percent. 

This outturn is mainly due to slower price increases in food and non-alcoholic beverages (decelerated to 1.9 percent from 2.7 percent) and housing, water, electricity, gas and other fuels in July 2019. This was the slowest inflation recorded since December 2016’s 2.2 percent and was the same rate for July 2017. 

Rice deflation also was observed for the third consecutive month, reaching -2.9 percent in July 2019. 

“We welcome this decelerating trend in prices but we remain on guard against possible upside risks such as adverse weather conditions, possible entry of the African swine fever, and uncertainty in the global oil market, among others,” Socioeconomic Planning Secretary Ernesto M. Pernia said. 

The Philippine Atmospheric, Geophysical, and Astronomical Services Administration or Pagasa expects the Southwest monsoon or Habagat to peak in the period July to September 2019.

Moreover, the agency said that 6 to 9 tropical cyclones are expected in the third quarter, while another 3 to 5 tropical cyclones could enter the Philippine Area of Responsibility (PAR) in the last quarter of 2019.

“Government agencies such as Department of Agriculture, Department of Trade and Industry, and the National Food Authority should ensure sufficient supply of basic food commodities, in view of the expected tropical cyclones that will enter the PAR,” he said.