August 7, 2024
MANILA – Philippine inflation in July surged to a nine-month high of 4.4 percent, fueled by rising prices in housing, utilities, transport, and food, the Philippine Statistics Authority (PSA) reported on Tuesday.
Preliminary data from the agency showed that the consumer price index accelerated from the 3.7 percent in June, but slower than the 4.7 percent recorded in the same period last year.
The July print did fall within the estimate of 4-4.8 percent of the Bangko Sentral ng Pilipinas (BSP), but it marks the first time that inflation breached the central bank’s 2 to 4 percent target range for the year.
READ: July inflation accelerates to 4.4% – PSA
The July result also exceeded the 4-percent average inflation forecast in an Inquirer poll of 11 economists conducted last week.
Inflation print in July marked the fastest growth in nine months or since the 4.9 percent logged in October 2023.
For the first seven months, inflation averaged 3.7 percent, significantly lower than the 6.8 percent in July 2023.
The government attributed the higher inflation to more expensive water, electricity, housing and fuels, whose prices rose by 2.3 percent in June from 0.1 percent. It contributed 70.4 percent to the overall inflation last month.
“In power, we expected that because the Manila Electric Co. (Meralco) rates were adjusted in July. We really have a big contribution to inflation. What really contributed to inflation this July is first power, so you have electricity and then energy, our gasoline, diesel, of course, LPG too,” National Statistician Claire Dennis Mapa said in a briefing.
Meralco last month increased electricity rates by P2 per kilowatt-hour (kWh) to P11.6012 per kWh.
The heavily weighted index for food and nonalcoholic beverages also drove the faster inflation as it quickened by 6.4 percent from 6.1 percent, contributing 17 percent to the overall inflation.
Top contributors
Among the top commodities that contributed to the inflation were rice, house rentals and gas.
Rice inflation, however, did ease to 20.9 percent in June from 22.5 percent in the previous month.
Despite the slower inflation, Mapa emphasized that rice prices might only decrease in August as the impact of the tariff cut begins to take effect.
“In terms of the price of rice or rice inflation, which contributes substantially to overall inflation, it is possible that we have a base effect to slow down rice inflation in August,” Mapa said.
Rice inflation contributed 1.6 percentage points to overall inflation or around 37.2 percent.
For Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, even if the supply of rice increases, it might not result in significantly lower rice prices despite reduced import tariffs.
“I think at this point the only challenge would be weather disturbances, which have not registered in the July reading, if at all it will register,” Asuncion said.
Meanwhile, the National Economic Development Authority said that the government is taking steps to support vulnerable sectors and ensure food security amid the La Niña phenomenon and higher inflation.