For the fifth month in a row, the increase in prices of key commodities slowed down further as prices of heavily-weighted indexes of food, non-alcoholic beverages and transportation posted slower annual increases, the Philippine Statistics Authority (PSA) said yesterday.
Inflation hit 5.4 percent in June from 6.1 percent the previous month.
This is also the slowest increase in the past 13 months and brings the average for the first six months of the year to 7.2 percent, above the government target range of between 2 and 4 percent.
PSA said the downtrend of the overall inflation in June was primarily influenced by the slower annual increase in food and non-alcoholic beverages at 6.7 percent in June 2023 from 7.4 percent in the previous month.
“The faster annual decrease in transport at -3.1 percent during the month from -0.5 percent in May also contributed to the downtrend of the overall inflation,” PSA added.
Housing, water, electricity, gas and other fuels, PSA noted, was the third main source of deceleration of the headline inflation in June with 5.6 percent annual growth rate from 6.5 percent in May.
PSA said the index of personal care, and miscellaneous goods and services exhibited faster year-on-year growth during the month at 5.8 percent from 5.7 percent in May.
The top three commodity groups contributing to the June headline inflation were: food and non-alcoholic beverages with 47.3 percent share or 2.6 percentage points; housing, water, electricity, gas and other fuels, 22.4 percent share or 1.2 percentage points; and restaurants and accommodation services, 14.7 percent share or 0.8 percentage point.
Eli Remolona, Bangko Sentral ng Pilipinas (BSP) governor, said the June inflation outturn of 5.4 percent “is within the BSP’s forecast range of 5.3 to 6.1 percent, consistent with the overall assessment that inflation will remain elevated over the near term before gradually decelerating back to target range in the fourth quarter in the absence of further supply-shocks.”
“The balance of risks to the inflation outlook continues to lean towards the upside owing to the potential impact of additional transport fare increases and minimum wage adjustments, persistent supply constraints of key food items, El Niño weather conditions, and possible knock-on effects of higher toll rates on prices of key agricultural items. The impact of a weaker-than-expected global economic recovery remains the primary downside risk to the outlook,” Remolona said in a statement.
President Ferdinand Marcos Jr. yesterday said increasing and making agricultural production more efficient and sustaining efforts to strengthen the value chain are the keys to further bring down inflation in the country.
The President, in a media interview on the sidelines of the 6th edition of the Livestock Philippines 2023 at the World Trade Center in Pasay City, said the government is determined to further bring down inflation.
“We are helping the producers of agricultural commodities to lower the price, make (their production) more efficient all their production, and also to take full advantage of the new technologies. Agriculture products are a big part of the inflation rate,” he said.
Marcos cited as example sugar which he described as a “very, very high component of our inflation rate.”
He said the prices of sugar stabilized after a clear schedule of importation and clear division of the imported supply between industrial and food use.
Arsenio Balisacan, National Economic and Development Authority secretary, noted the government’s swift action to provide immediate solutions to mitigate the effects of rising prices, particularly for the most vulnerable sectors.
“We are making progress in managing inflation and we can expect that it will decline to within 2-4 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.
Finance Secretary Benjamin Diokno said the sustained deceleration of inflation in June suggests that government efforts to tackle inflation are working.
“This indicates that we are on track to bring inflation back within the target range of 2 to 4 percent sometime in the fourth quarter of this year and below the lower limit of the target in the first quarter of 2024,” Diokno said.
