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Monday, June 17, 2024

Inflation hits 13-month low

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PSA: 5.4 percent in June as price hikes for food, beverages ease

Inflation in June 2023 slowed to a 13-month low of 5.4 percent from 6.1 percent a month ago, as price increases for food and non-alcoholic beverages eased, the Philippine Statistics Authority (PSA) said Wednesday.

This was also slower than the 6.1 percent posted a year ago in June, and brought the first half average to 7.2 percent, still much higher than the government’s target range of 2 percent to 4 percent for the entire year.

“This is the fifth consecutive month of deceleration in the headline inflation and the lowest in the past 13 months,” National Statistician Dennis Mapa said in an online briefing.

From a peak of 8.7 percent in January 2023, inflation eased to 8.6 percent in February, 7.6 percent in March, 6.6 percent in April, and 6.1 percent in May.

Mapa said the decline in overall inflation in June was mainly due to the slower increase in food and non-alcoholic beverages, which was at 6.7 percent, down from 7.4 percent in May.

Slower increases in transport costs also contributed to the lower inflation rate in June.

Price increases in housing, water, electricity, gas and other fuels also slowed to 5.6 percent in June, down from 6.5 percent in May.

Slower annual increases were also noted in the indices of alcoholic beverages and tobacco, 11.6 percent from 12.3 percent; furnishings, household equipment and routine household maintenance, 6.0 percent from 6.2 percent; health, 3.9 percent from 4.1 percent; recreation, sport and culture, 4.8 percent from 4.9 percent; and restaurants and accommodation services, 8.2 percent from 8.3 percent.

On the other hand, prices for personal care and miscellaneous goods and services grew faster in June, at 5.8 percent, up from 5.7 percent in May.

President Ferdinand Marcos Jr. on Wednesday vowed to protect the purchasing power of Filipinos as the country reported its lowest inflation rate in 13 months.

In a tweet, the President said that the government’s actions have been effective in strengthening the country’s economy.

Marcos also said increasing agricultural production is a must to keep inflation low.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the government was making progress in managing inflation, saying they expect it to hit the target 2 percent to 4 percent by the end of the year.

“The government remains committed to protecting the purchasing power of the Filipino people by ensuring food security, reducing transport and logistics costs, and lowering energy costs for Filipino households,” Balisacan said.

The President recently approved the Department of Social Welfare and Development’s food stamp program, which is expected to begin pilot implementation this month. The program will provide access to food for poor and vulnerable households through monetary-based assistance using electronic cards with P3,000 worth of food credits.

“Meanwhile, the Inter-Agency Committee on Inflation and Market Outlook will continue to take proactive steps to address the main causes of inflation. This is particularly important considering the impending El Niño, which poses risks to food supply and prices,” Balisacan said.

The June 2023 inflation rate was within the Bangko Sentral ng Pilipinas forecast range of 5.3 percent to 6.1 percent for the month.

At the same time, the central bank said transport fare hikes, increases in wages, food supply problems, and the El Niño weather phenomenon could raise prices again. Moreover, higher toll rates would jack up the prices of key agricultural items, it said.

The BSP said it remained ready to raise interest rates if inflation rises again.

Finance Secretary Benjamin Diokno said the consistent decline in inflation for the fifth consecutive month suggested the government’s continued progress in taming price increases.

“This indicates that we are on track to manage inflation to within target sometime in the fourth quarter of this year and below the lower limit of the target in the first quarter of 2024,” Diokno said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort also cited the El Nino as an inflation risk, as it could reduce food production and jack up prices.

Ricafort also said that the proposed higher taxes or new taxes for the coming months could lead to some pick up in prices and overall inflation, as an unintended consequence of government efforts to narrow the country’s budget deficit and temper the growth of the national debt.

Core inflation, excluding selected food and energy items, also decelerated to 7.4 percent in June 2023 from 7.7 percent in May 2023. This brings the average core inflation for the first half of the year to 7.7 percent. In June 2022, core inflation stood at 3.1 percent.

Inflation in the National Capital Region moved at a slower pace in June 2023 at 5.6 percent from 6.5 percent in May. In June 2022, the inflation rate in the area was 5.6 percent.

All other regions outside the NCR except MIMAROPA also recorded slower inflation in June.

For the fourth consecutive month, Cordillera Administrative Region had the lowest inflation rate at 3.2 percent, while MIMAROPA Region remained at the highest inflation rate at 7.2 percent.

Speaker Ferdinand Martin G. Romualdez on Wednesday welcomed the slowdown in the June inflation rate, attributing it to the administration’s sound economic policies.

“President Marcos Jr.’s carefully crafted spending plan in the 2023 national budget, his many investment tours during his term that inspire investor confidence, and his focused programs and actions against high prices of goods all contributed to this drop in inflation,” Romualdez said.

Meanwhile, the Department of Trade and Industry (DTI) said manufacturers of 128 stock keeping units under the Suggested Retail Price (SRP) Bulletin are seeking price increases.

The Consumer Protection Group (CPG) of the DTI said most requests for price increases are for canned food and bottled water.

These included canned sardines, condensed and evaporated milk, 3-in-1 coffee mixes, instant noodles, bottled water, meat and beef loaf and corned beef.

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