Consumer prices in June rose at a pace faster than what the Bangko Sentral ng Pilipinas and most economists expected. The June inflation rate climbed to a five-year high of 5.2 percent from 4.6 percent in May, and much higher than 2.5 percent registered in the same month last year.
The June figure brought the average inflation rate in the first six months at 4.3 percent, or beyond the Bangko Sentral’s target range of 2 percent to 4 percent for 2018. The higher rate indicates that certain assumptions made by government forecasters earlier were not met.
Data provided by the Philippine Statistics Authority showed that the higher annual price increases of 6.1 percent in the heavily-weighted food and non-alcoholic beverages index largely caused the inflation in June to spike. The food index by itself climbed 5.8 percent in June, with higher annual mark-ups observed in the indices of rice, 4.7 percent; corn, 14.1 percent; meat, 5 percent; and vegetables, 8.6 percent.
The country’s rice supply was understandably short until last month when the National Food Authority finally imported the commodity. The prices of commercial rice in the market rose to as much as P45 to P50 per kilo with the absence of NFA rice in the market since March of last year. NFA administrator Jason Aquino earlier conceded that the agency failed to comply with the 15-day buffer stock policy for almost one year.
The increase in petroleum prices, along with the weak peso, may have also contributed to the steeper increase in the prices of other food items like vegetables and meat. Rising transportation cost inflates the cost of food products, especially those coming from the provinces.
The surprise inflation rate in June, meanwhile, will prompt the Bangko Sentral to take a more aggressive approach in raising interest rates to curb rising prices. Governor Nestor Espenilla Jr. described the higher-than-expected June inflation as a “setback.”
The government should also identify the artificial bottlenecks affecting the supply of goods and services. Unscrupulous traders and speculators may have already taken advantage of the high inflation rate by hoarding goods.