Inflation accelerates further to 2.7% in July

Inflation continued to accelerate in July as the easing of lockdown restrictions during the month brought about upward price pressures in transportation prices, the Philippine Statistics Authority (PSA) reported.

In a virtual press conference on Wednesday, National Statistician Dennis Mapa reported that July inflation was at 2.7%, the fastest since the 2.9% in January this year.

The latest reading compares with the 2.5% in June, and the 2.4% in July 2019.

In a separate statement, the Bangko Sentral ng Pilipinas (BSP) said the latest inflation print was within its forecast range of 2.2% to 3.0% and is consistent with its prevailing assessment that “inflation is expected to remain benign over the policy horizon due largely to the potential adverse impact of COVID-19 on the domestic and global economic prospects.”

The latest baseline forecasts indicate that inflation is likely to settle close to the mid-point of the government’s target range of 3.0% ± 1.0 percentage point for 2020 to 2022, the central bank noted.

Transportation

"Ang pangunahing dahilan ng pagtaas ng inflation sa buwan ng Hulyo 2020 ay ang mas mabilis na paggalaw ng presyo ng transportasyon," said Mapa.

Transportation costs for the month rose for domestic airfare, ferry/ship fares during the month, with tricycle fares now averaging P17 per person from P8.50 the same month last year.

“Transport costs continued to rise at an above-trend pace sequentially, despite global oil prices remaining relatively steady compared to the previous month. This might be a result of higher demand for transportation services, as the economy emerged out of lockdown,” HSBC Global Research noted.

Metro Manila and other "high-risk" areas for COVID-19 were under general community quarantine (GCQ) for the whole month of July.

Annual increments were also seen in alcoholic beverages and tobacco (19.3%); housing, water, electricity, gas, and other fuels (0.8%); and restaurant and miscellaneous goods and services (2.5%).

Except for the health index which remained at 2.8%, the six remaining commodity groups exhibited slower annual increases during the month.

In terms of geographical location, the National Capital Region (NCR) recorded inflation at 2.2% versus 2.0% the previous month, while areas outside NCR moved up to 2.9% from 2.7%.

For the bottom 30% income households, inflation was recorded at 2.9% in July, slower than the 3.0% in June.

"Nakita natin na medyo mabagal ang pagtaas ng inflation sa items on the food basket which I mentioned 58% kasi weight niya sa inflation ng bottom 30% compared doon sa all households na 30%," said Mapa.

"Sensitive sila doon sa galaw ng presyo ng pagkain," he added. —AOL/KBK/KG, GMA News