Inflation rate eased slightly in June 2024 to 3.7 percent from 3.9 percent in the previous month, according to the Philippine Statistics Authority (PSA).
The June 2024 inflation of 3.7 percent is within the BSP’s forecast range of 3.4 to 4.2 percent.
This brought the year-to-date inflation to clock 3.5 percent, within the government’s ceiling of 2 percent to 4 percent.
“The latest inflation outturn is consistent with the BSP’s latest outlook that inflation will settle within the target range for 2024-2025 with inflation expectations remaining well-anchored,” BSP said.
“The balance of risks to the inflation outlook has shifted to the downside for 2024 and 2025 due largely to the impact of lower import tariffs on rice under Executive Order (EO) 62 (Series of 2024),” BSP said.
Nonetheless, BSP said higher prices of food items other than rice, transport charges, and electricity rates continue to pose upside risks to inflation.
Meanwhile, House ways and means committee chair Joey Salceda said that inflation is “under control”, as he expressed optimism that President Marcos’ measures to reduce imported rice tariffs and boost agricultural production will yield results in the inflation figures for next month.
“As usual, it’s still about rice, but we are looking more at year-on-year effects now, rather than a continuing momentum of price increases. In other words, it’s not getting worse. It was 3.9 percent last month,” Salceda said.
Salceda also expressed hope that the impact of the El Niño phenomenon on fuel, water, and electricity prices will also “dissipate as the rains begin.”
He said he does not foresee any major shake ups in monetary policy, noting that the Bangko Sentral ng Pilipinas (BSP) would remain “relatively slow” to make any moves on interest rates until the country’s inflation rate is in the 2-3 percent range.
In a separate statement, the National Economic and Development Authority attributed the decline in the June inflation to the lower energy and transportation costs.
A significant factor contributing to this slowdown is the sharper deflation in electricity, which was recorded at -13.7 percent from -8.5 percent
This led to a reduction in the inflation rate of housing and utilities to a mere 0.1 percent in June, down from 0.9 percent in May.
In addition, transport inflation decelerated (3.1 percent from 3.5 percent) primarily due to lower inflation rates in personal transport (3.5 percent from 5.3 percent) and gasoline (2.3 percent from 5.2 percent) This decrease followed the additional rollback in gasoline prices in early June 2024.
“We are committed to maintaining the country’s inflation rate within our target range of 3 to 4 percent,” Arsenio Balisacan, secretary of the National Economic and Development Authority said.
“The easing in our inflation rate in June, mainly due to lower electricity rates, highlights the importance of strengthening our energy sector to sustain our gains,” he added.
On the other hand, food inflation saw an increase to 6.5 percent in June, up from 6.1 percent in the previous month. This was mainly driven by higher prices of vegetables and meat. Vegetables recorded an inflation rate of 7.2 percent in June, up from 2.7 percent in May, as the onset of the rainy season affected supply.
While rice inflation slightly declined, it remained high at 22.5 percent in June from 23.0 percent in May.
“We will continue to work closely with the government, stakeholders, and other priority sectors to implement necessary measures to ensure that the country will have a sufficient and affordable food supply—including rice—for every Filipino,” the country’s chief economic planner said.
Finance Secretary Ralph G. Recto has expressed optimism that the inflation rate will remain within the government’s target band in 2024 after its decline in June.
“We expect inflation to fall within our 2% to 4% target this year especially after the government has taken decisive and data-driven steps to control the rising price of rice. This will help alleviate the burden of high rice prices that disproportionately affect the poor and vulnerable households,” the Finance chief said.
While food inflation slightly increased to 6.5% in June from 6.1% in May, the government expects this to slow down once the rice tariff is lowered to 15% from 35%, as embodied in Executive Order (EO) No. 62. This is expected to pull down rice prices by 10%.
EO 62 also maintained the reduced tariff rates on corn, pork, and mechanically deboned meat under EO Nos. 50 and EO 13, s. 2023 until 2028 to further mitigate food inflation, foster policy stability and investment planning, and enhance food security.
This month, the Department of Agriculture (DA) is set to release the implementing guidelines under Administrative Order (AO) No. 20. This seeks to enhance the country’s agricultural importation policy regime by streamlining administrative processes and removing non-tariff barriers.
The DA also launched its large-scale trial of the Bigas 29 program (P29) in ten Kadiwa sites in Metro Manila and Bulacan, offering rice for PHP 29 per kilo to poor families and other vulnerable groups.
By August, the DA aims to double the total number of Kadiwa sites selling subsidized rice and expand their reach to include locations in Visayas and Mindanao.