Inflation slightly up at 2.8% in July – PSA

Inflation accelerated slightly in July on the back of higher prices of housing and utilities, as well as transport, education, and restaurant and miscellaneous services, data released by the Philippine Statistics Authority (PSA) showed Friday.

"The headline inflation at the national level accelerated by 2.8 percent in July 2017," the PSA said in a statement.

This is faster than the 2.7 percent downwardly revised inflation figures posted in June, and much faster than the 1.9 percent in July 2016.

The highest increases were notched by transport prices which went up by 3.8 percent; education by 2.3 percent; housing, water, electricity, gas and other fuels by 2.2 percent; and restaurant and miscellaneous goods and services by 2.1 percent.

The indices of food and non-alcoholic beverages rose by 3.3 percent; and furnishing, household equipment and routine maintenance of houses by 2 percent.

"However, this is still lower than market expectations of 3 percent, and well within government’s target of 2 to 4 percent," Socioeconomic Planning Secretary Ernesto Pernia said in a separate statement.

"Meanwhile, core inflation, which excludes select volatile food and energy prices, logged its lowest monthly record for the year of 2.1 percent in July 2017 from 2.6 percent in June," he said.

The inflation in July was a bit slower than median expectations given the steady depreciation of the peso and higher oil prices, said Guian Angelo Dumalagan, market economist at Land Bank of the Philippines.

"However, it is generally consistent with views of manageable inflation in the country," Dumalagan told GMA News Online.

ING Bank Manila senior economist Joey Cuyegkeng also said the July inflation rate of 2.8 percent confirms that inflation in the near term would remain moderate and in line with central bank's forecast for the year.

"Headline inflation is likely to remain in line with a 3-3.1 percent average inflation rate for 2017. This is despite possible intensification of energy-related price pressure which may result in higher August or September headline inflation. Power rate adjustments and higher oil prices may push headline inflation," Cuyegkeng noted.

Inflation risk in the next 12 to 18 months would be tax reform-induced price pressures that could push average inflation to around 3.5 percent in 2018, he added.

According to the PSA, the revised June inflation rate of 2.7 percent, from 2.8 percent, was a result of the following developments:

• Lanao del Sur was included in computing the June 2017 CPI. The prices in May 2017 were used to represent prices for June 2017 as the basis for comparing with July 2017, as the province was able to conduct price surveys in sample municipalities outside Marawi City.

• Lanao del Sur was not able to survey prices in Marawi City. Thus, the prices were based the price movements of commodities in the nearest province, Lanao del Norte.

• Updated tuition fee from the province of Isabela was included in the computation of CPI for June 2017.

The July inflation rate is in line with the central bank inflation outlook of 3.1 percent for the year, and within the 2 to 4 percent target range of the government. — VDS, GMA News