June inflation breaches 5% on higher food prices

Inflation accelerated further in June to the fastest level in at least five years, the Philippine Statistics Authority announced Thursday.

PSA data showed inflation clocked in at 5.2 percent, the fastest in at least five years using 2012 as base year.

"It was primarily brought about by higher annual rate posted in the heavily-weighted food and non-alcoholic beverages index at 6.1 percent," the PSA said.

The June inflation compares with 4.6 percent in May 2018, and 2.5 percent in June 2017.

This is also faster than the Bangko Sentral forecast of 4.3- to 5.1 percent , and 4.9-percent outlook of the Department of Finance (DOF).

The acceleration in June was due to faster increments in prices of alcoholic beverages and tobacco (20.8 percent); and housing, water, electricity, gas, and other fuels (4.6 percent).

Increases were also recorded in furnishing (3.0 percent), transport (7.1 percent), communication (0.4 percent), and education (4.0 percent).

Year-on-year inflation in the National Capital Region was even quicker at 5.8 percent, while the inflation in areas outside NCR clocked in at 5.1 percent.

The inflation numbers prompted Bangko Sentral ng Pilipinas to review the inflation path in light of what it said was the 5.2-percent “setback” in June.

In a separate statement, Socioeconomic Planning Secretary Ernesto Pernia said the report is “unwelcome news,” but that inflation is likely to taper off by the year’s end.

“We expect inflation to peak in the third quarter and taper off by October. Government needs to implement necessary measures, both short-term and long-term, to address the impact of inflation,” he said.

“An important and urgent challenge to manage inflation is actually the need to increase the supply of goods and services, especially food—in particular, rice, which takes up a large chunk of the food budget of poor families. When demand outweighs supply, naturally prices go up,” Pernia noted.

Excluding selected food and energy items, core inflation accelerated by 4.3 percent in June 2018, compared with 3.6 percent in May 2018.

The food index alone went up by 5.8 percent, nearly twice higher than the 3.1-percent increase in June 2017 because of higher mark-ups in several food groups:

• Rice (4.7%)

• Corn (14.1%)

• Other Cereals, Flour, Cereal Preparation, Bread,  Pasta and Other Bakery Products (2.4%)

• Meat (5.0%)

• Vegetables (8.6%)

• Sugar, Jam, Honey, Chocolate and Confectionery (3.9%)

• Food Products not Elsewhere Classified (3.1%)

DBS Group Research in April said inflation is expected to 'top out' at 5 to 6 percent, as a result of the the government's tax reform program. —KBK/VDS, GMA News