Inflation accelerates to fresh 3-year high of 6.4% in July

The Philippine Statistics Authority (PSA) reported on Friday that inflation, or the rate of increase in the prices of consumer goods and services, quickened further for the fifth straight month in July. 

Inflation clocked in at 6.4% in the previous month, PSA chief and National Statistician Claire Dennis Mapa said at a press conference.

July’s inflation print was faster than the 6.1% recorded in June and the 3.7% posted in July 2021.

Last month’s inflation rate marks a new three-year high since the 6.9% recorded in October 2018.

It also fell at the upper end of the Bangko Sentral ng Pilipinas’ inflation forecast range of 5.6% to 6.4% for July.  

Year-to-date inflation stood at 4.7%, within the government’s projection of 4.5% to 5.5% for the entire year.

“Ang dahilan ng mataas na antas ng inflation nitong Hulyo 2022 ay ang mas mabilis na pagtaas ng presyo ng Food and Non-Alcoholic Beverages.  Ito ay may 6.9% inflation at 64% share sa pagtaas ng pangkalahatang inflation sa bansa,” Mapa said.

(The cause of the high inflation in July 2022 was the faster increase in the prices of Food and Non-Alcoholic Beverages. This had an inflation of 6.9% and 64% share to the overall inflation in the country.) 

In particular, fish and other seafood’s inflation rose to 9.2% from 6.7%; meat and other parts of slaughtered animals also recorded an inflation of 9.9% from 8.1% in the prior month; and sugar, confectionary, and deserts saw an inflation of 17.6% from 10.9% in June.

Meanwhile, vegetables, tubers, plantains, cooking bananas and pulses registered lower inflation of 5.6%.

The rest of the food groups exhibited faster annual growth rates of their indices, according to the PSA chief.

Mapa said the second commodity group that posted faster inflation is the Transport index with an 18.1% inflation in July from 17.1% in June and 17% share to the increase in the overall print as land transport fares increased to 7.1% from 2.7%.

Passenger ship fares also saw an inflation uptick to 42.6% from 18.6% while air transport fare also grew to 33.6% from 16.8%.

The third commodity group that contributed to the faster July inflation print is the Restaurants and Accommodation Services index with an inflation of 3.4% from 2.8% and a share of 10.9% to the increase in the overall inflation last month.

Upside risks

In a separate statement, the central bank said that July's 6.4% inflation is “consistent with the BSP’s assessment of elevated price pressures over the near term on firmer indication of second-round effects.”

“The BSP recognizes the broadening of price pressures amid the emergence of second-round effects, including the approved wage and fare hikes as well as elevated inflation expectations. The risk to the inflation outlook is tilted on the upside for 2022 and 2023 but is broadly balanced for 2024,” it said.

“Upside risks over the near-term continue to emanate from the higher global non-oil prices driven by the protracted war between Russia and Ukraine as well as from the potential second-round impact of higher oil prices on the prices of goods and services,” it added.

The BSP said that domestic food prices also pose upside risks due to shortages in the supply of several key food items.

“Meanwhile, a slower-than-expected global recovery due to tighter global monetary policy conditions and the continued uncertainty from the COVID-19 pandemic continues to present a downside risk to the outlook,” the central bank said.

Asked for a reaction to the latest inflation rate, Press Secretary Trixie Cruz-Angeles said the matter was not discussed during Friday's Cabinet meeting.

"I understand that these were projected even before, given the inputs due to the international events that have led to the increase in the prices of petroleum. All of these have been factored," Cruz-Angeles said. 

"And in fact it was even mentioned in the SONA (State of the Nation Address) of the President, so yes it’s part of it, we have expected this," she added.

Inflation in Metro Manila, outside NCR

Unlike the national trend, inflation in Metro Manila saw a decline to 5.1% last month from 5.6% in June.

Mapa said the deceleration of inflation in the National Capital Region (NCR) was due to the lower annual increase in the housing, water, electricity, gas and other fuels index at 3.6%, from 5.9% in the previous month.

Lower increases were also seen in the the indices of health at 1.3%; and personal care, and miscellaneous goods and services at 2%.

In areas outside NCR, inflation accelerated to 6.8% from 6.3% in June amid the rise in prices in the Food and Non-Alcoholic Beverages index at 7% and transport index at 18.2%.

Except for Cordillera Administrative Region (CAR) and Region I (Ilocos Region), all regions in areas outside NRC had higher inflation in July, according to the PSA chief.

In particular, Region 11 or Davao Region had the highest inflation rate of 8.6%, while the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) remained as the region with the lowest inflation at 3.6%.

Inflation for bottom 30%

Inflation for the bottom 30% income households also increased to 5.9% from 5% in June and 4.4% in July 2021.

The uptick was due to the higher growth in the Food and Non-Alcoholic Beverages index at 5.9% from 5% and the Transport index with 10% inflation from 6.8%.

Food inflation for the bottom 30% also increased to 6.1% from 5.1% due higher growth in the sugar, jam, honey, chocolate and confectionery index at 26.7%, from 15.5% in June.

The index for fish and seafood also recorded a faster annual increment of 8.4% in July, from 6.5% month-on-month. — with Anna Felicia Bajo/RSJ/VBL, GMA News