The Philippines’ inflation rate slowed for a fifth month in a row in June on the back of slower movements in food, transport, and utility prices, the Philippine Statistics Authority (PSA) reported on Wednesday.
At a press briefing, National Statistician and PSA chief Claire Dennis Mapa reported that inflation — the rate of increase in the prices of consumer goods and services — eased to 5.4% last month from 6.1% in May, bringing the year-to-date rate to 7.2%.
This is the fifth time that inflation slipped from a peak of 8.7% in January.
June’s print is also the lowest rate in 15 months or since April 2022’s 4.9% inflation rate, according to Mapa.
Last month's inflation rate falls within the Bangko Sentral ng Pilipinas' forecast range of 5.3% to 6.1%.
However, the year-to-date average is still above the government’s target range of 2% to 4%.
In a separate statement, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the Philippines is making progress in managing inflation, which he said is expected to further decline to within 2% to 4% by the end of the year.
For his part, Finance Secretary Benjamin Diokno said the consistent decline in inflation rate for the fifth consecutive month suggests the government’s continued progress in taming inflation.
“This indicates that we are on track to manage inflation to within target sometime in the fourth quarter of this year and below the lower limit of the target in the first quarter of 2024,” he said.
“Ang pangunahing dahilan ng pagbagal ng antas ng inflation nitong Hunyo 2023 kaysa noong Mayo 2023 ay ang mas mabagal na paggalaw ng presyo ng Food and Non-Alcoholic Beverages,” Mapa said.
(The main reason for the slowdown in inflation rate in June 2023 versus May 2023 was the slower movement in the prices of Food and Non-Alcoholic Beverages.)
The PSA chief said the Food and Non-Alcoholic Beverages index saw an inflation print of 6.7%, down from 7.4% in the previous month. It also contributed 36.2% to the overall downtrend in June.
“Ang nag-ambag ng malaki sa pagbagal ng inflation ng Food and Non-Alcoholic Beverages ay ang mas mabagal na pagtaas ng presyo ng mga meat and other parts of slaughtered land animals, tulad ng manok; fruits and nuts, gaya ng mangga; at sugar, confectionery and desserts,” Mapa said.
(Contributing largely to the slowdown of Food and Non-Alcoholic Beverages’ inflation was the slower increase in the prices of meat and other parts of slaughtered land animals, such as chicken; fruits and nuts, such as mango; and sugar, confectionery and desserts.)
In particular, the rate of increase in meat prices eased to 0.3% in June from 3.2% in May, fruits and nuts dipped to 11.4% from 14.3%, while sugar and desserts decelerated to 28.9% from 31.6%.
The second commodity group that contributed to the downtrend was the Transport index, which saw an inflation rate of -3.1% from -0.5 in May. It also accounted for 32.2% in the overall decline.
“Ang nag-ambag ng malaki sa pagbaba ng inflation ng Transport ay ang mas mabilis na pagbaba ng presyo ng mga gasolina, na may -24% inflation [from -18.6%]; at diesel, na may -32.7% inflation [from -27.7],” Mapa said.
Likewise, the inflation for the sub-index of other passenger transport by road saw a slower rate of 11.7% from 13.4% month-on-month.
The third commodity group that caused the slowdown in June’s inflation was Housing, Water, Electricity, Gas and Other Fuels with a rate of 5.6% from 6.5% in May and a share of 26.4% to the overall decline.
Mapa said prices of electricity saw a decline of 10.3% from 13.6% month-on-month, while cost of rent also declined by 5.5% from 5.6%.
“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.
Food inflation, rice, El Niño
Food inflation, which tracks price movements in a “basket” of foods commonly purchased by households, also declined for the fifth consecutive month in June at 6.7% from 7.5% in May.
The slowdown in food inflation was due to the decline in the rates of meat, fruits and nuts, and sugar and desserts.
Also contributing to the deceleration in food inflation were corn (from 5.9% to 5.3%); flour, bread and other bakery products, pasta products, and other cereals (from 11.4% to 11%); milk, other dairy products and eggs (from 12.1% to 11.2%); oils and fats (from 8.5% to 5.6%); and ready-made food and other food products not elsewhere classified (from 9% to 8.5%).
Meanwhile, higher growth were seen in the indices of rice at 3.6% from 3.4%; fish and other seafood at 6.2% from 5%; and vegetables, tubers, plantains, cooking bananas and pulses at 12.7% from 12.6%.
Mapa said that while the overall as well as food inflation are trending down, there are still upward risks brought about by other items, especially rice.
The PSA chief said rice’s weight to the consumer price index is about 9% for all income households and 20% for the bottom 30% income households in the country.
However, Mapa said that the increase in rice prices are still “small increments.”
“For regular milled rice in April it's P40.60 per kilo. Then it increased to P40.90 per kilo in May and in June rose to P41.40 per kilo,” he said.
Asked about the impact of the El Niño on inflation, Mapa said the PSA is still tracking what will be its effect on the volume and value of agri-fisheries production.
But, he said, if the production drops due to El Niño, it will eventually cause prices to go up.
The NEDA earlier brushed off the possible blow of El Niño phenomenon to the country’s economy.
PAGASA on Tuesday declared the start of the El Niño phenomenon in the Tropical Pacific and its effects are now expected in the country.
Inflation in Metro Manila, outside NCR
Similar to the national trend, inflation in the National Capital Region (NCR) followed suit with a rate of 5.6%, down from 6.5% in May due to slower movements in food and utility prices.
In areas outside NCR, inflation also decelerated to 5.3% from 6% month-on-month amid slowdown in transport, food, and utility costs.
Except for MIMAROPA Region, which retained its previous month’s inflation rate, all regions outside NCR recorded slower inflation rates during the month relative to their May 2023 annual rates.
For the fourth consecutive month, Cordillera Administrative Region was the region with the lowest inflation rate at 3.2%, while MIMAROPA remained with the highest inflation rate during the month at 7.2%.
Inflation for bottom 30%
Inflation felt by the bottom 30% income households in the country, likewise, eased to 6.1% from 6.7% — the fourth month in a row for the income bracket.
The national average for the income group stood at 8%, still faster than the 6.5% in the first half of 2022.
The slower overall inflation for the bottom 30% income households was primarily brought about by the lower annual growth rate in the Food and Non-Alcoholic Beverages at 6.9% from 7.4% in the prior month.
This was followed by Housing, Water, Electricity, Gas and Other Fuels with 4.8% annual increment during the month from 6.5% in May.
The Transport index also contributed to the lower overall inflation after posting a year-on-year decline of -1.2% from 1.3% annual increase in the previous month.
Balisacan, nonetheless, said that the government has been swift to provide immediate solutions to mitigate the effects of rising prices, particularly for the most vulnerable sectors.
“In line with this, the President recently approved the Department of Social Welfare and Development’s food stamp program, which is expected to begin pilot implementation this month. The program will provide access to food for poor and vulnerable households through monetary-based assistance using electronic cards with P3,000.00 worth of food credits,” the NEDA chief said.
“Meanwhile, the Inter-Agency Committee on Inflation and Market Outlook will continue to take proactive steps to address the main causes of inflation. This is particularly important considering the impending El Niño, which poses risks to food supply and prices,” the country’s chief economist said.
Diokno, likewise, said that “the economic team assures the Filipino nation that the administration is ready to take on forthcoming challenges and bring down the cost of living while fostering a robust economic environment conducive to growth and macroeconomic stability.”
Meanwhile, interviewed by reporters, President Ferdinand "Bongbong" Marcos Jr. on Wednesday vowed to continue bring down the country's inflation rate by increasing the country's production rate.
"We will try of course to continue to bring it down but that requires our success in increasing our production, making it more efficient and again the value chain that I'm always talking about ad infinitum but it's really the answer," Marcos said.
In May, Marcos directed the creation of an inter-agency committee that will focus on addressing inflation and enhancing initiatives to improve the country’s economy.
Marcos' Executive Order No. 28 states that the Inter-Agency Committee on Inflation and Market Outlook shall serve as an advisory body to the Economic Development Group on measures that “would keep inflation, particularly of food and energy, within the government's inflation targets.” —KBK, GMA Integrated News