OIL PRICE. A motorist refuels at a gas station along Timog Avenue in South Triangle, Quezon City in this undated photo. The Philippine Statistics Authority reported Friday (July 5, 2024) that transport inflation decelerated by 3.1 percent from 3.5 percent in May primarily due to lower inflation rates in personal transport and gasoline. (PNA photo by Ben Briones)
MANILA – The country's headline inflation decelerated to 3.7 percent in June from 3.9 percent in May due to the easing of energy and transport costs, the Philippine Statistics Authority (PSA) said.
In a press briefing on Friday, PSA Undersecretary and National Statistician Dennis Mapa said inflation in June last year was higher at 5.4 percent.
Year-to-date headline inflation was at 3.5 percent, well within the government's 2 percent to 4 percent target.
Mapa said the downtrend in the overall inflation in June was primarily influenced by the slower annual increment of housing, water, electricity, gas, and other fuels at 0.1 percent from 0.9 percent in May.
The sharper deflation in electricity, recorded at -13.7 percent from -8.5 percent in May, significantly contributed to the slowdown.
Transport inflation, likewise, decelerated to 3.1 percent from 3.5 percent due to lower inflation rates in personal transport and gasoline.
Restaurants and accommodation services with 5.1 percent inflation in June, down from 5.3 percent in the previous month, also contributed to the lower inflation.
Food inflation rose to 6.5 percent from 6.1 percent in May due to higher prices of vegetables, meat, and corn.
Rice inflation, however, already slightly eased to 22.5 percent from 23 percent in May due to the 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 nagkaron tayong slight reduction in the overall inflation. (We have a big reduction... about 20 centavos per kg. in well-milled rice, so we have a -0.2 percent reduction for that particular commodity, so we have a slight reduction in the overall inflation)," Mapa said.
"The one that contributed in terms of prices basically is the price for the well-milled rice."
He said the average price per kg. of well-milled rice went down to PHP55.96 from PHP56.06 in May.
In a statement, the National Economic and Development Authority (NEDA) assured the public that the government is committed to addressing the issue of rising food prices and ensuring food security.
“We are committed to maintaining the country’s inflation rate within our target range of 2 (percent) to 4 percent. 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,” NEDA Secretary Arsenio Balisacan said.
“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 Development Budget Coordination Committee (DBCC) also earlier committed to implementing monetary policy measures and well-targeted government interventions that address the primary drivers of inflation.
“This includes implementing the new Comprehensive Tariff Program for 2024-2028 to improve the affordability of essential commodities amid the rising global prices, and the Food Stamp Program to mitigate the impact of elevated food prices on the poor and vulnerable sector,” the DBCC said in a statement.
President Ferdinand R. Marcos Jr. earlier issued Executive Order (EO) 62, which modified the tariff rates on various products to ensure a continuous supply of goods and to protect the purchasing power of the Filipino people.
The rice tariff, in particular, was reduced to 15 percent from 35 percent.
Medium-term inflation path
In a separate statement, the Bangko Sentral ng Pilipinas (BSP) said the June inflation of 3.7 percent is within its forecast range of 3.4 percent to 4.2 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," it said.
The BSP noted that the balance of risks to the inflation outlook shifted to the downside for 2024 and 2025 due largely to the impact of lower import tariffs on rice under EO 62.
"Nonetheless, higher prices of food items other than rice, transport charges, and electricity rates continue to pose upside risks to inflation," it said.
The BSP said the Monetary Board supports the national government’s implementation of the reduction in the tariff on rice imports to address supply-side pressures on prices and sustain the disinflation process.
"Moving forward, the BSP will ensure that monetary policy settings remain in line with its primary mandate to safeguard price stability conducive to sustainable economic growth," it said.
Outstanding management
Speaker Ferdinand Martin G. Romualdez lauded the Marcos administration for its outstanding management of the nation’s economy.
“This means that inflation, which measures the rate of increase in the prices of goods and services, has been effectively controlled by the administration's strategic economic policies,” he said in a statement.
Romualdez said Malacañang and the House of Representatives would continue to work together to further ease the inflation.
“We will work to further reduce electricity rates and rice prices. Accomplishing that will surely lead to a further moderation of inflation,” he said, adding that amendment to the Electric Power Industry Reform Act (EPIRA) is one way to bring down the cost of electricity.
Romualdez said Congress will look into the problem why EPIRA failed to streamline the energy sector that could have lower down the power rates.
“We will call all stakeholders - power producers and distributors, the transmission company, and most importantly the consumers represented by consumer groups,” he said.
“We must remain proactive and resilient, ensuring our economic policies evolve with the changing global dynamics. The road ahead may present new challenges, but with the same dedication and strategic approach, we will continue to thrive,” he added.
House ways and means committee chair Joey Salceda said 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," he said.
He also expressed hope that the impact of the El Niño phenomenon on fuel, water, and electricity prices will also "dissipate as the rains begin."
Salceda said he does not foresee any major shakeups 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 settles in the 2 percent to 3 percent range. (with reports from Filane Mikee Cervantes/Zaldy De Layola/PNA)
