Inflation continues downtrend for 6th straight month at 4.7% in July

The Philippines’ inflation rate continued to decline for the sixth straight month in July amid slower movements in utility, food, and transport prices, the Philippine Statistics Authority (PSA) reported on Friday.

At a press briefing, National Statistician and PSA chief Claire Dennis Mapa said that inflation —or the rate of increase in the prices of consumer goods and services — decelerated further to 4.7% last month from 5.4% in June and 6.4% in July 2022.

July’s rate is the lowest in 16 months or since March 2022’s 4.0% print, according to Mapa.

This brought the year-to-date print to 6.8%, still above the government’s ceiling of 2% to 4%.

This is the sixth time that inflation declined from a peak of 8.7% in January.

In a Viber message to reporters, Finance Secretary Benjamin Diokno said the cooling down further of inflation for the sixth straight month is “strongly supporting the likelihood that inflation might be within the 2% to 4% target range by the fourth quarter of 2023.”

“While we continue to experience a downtrend in inflation, we need to be vigilant, especially as we face increasingly volatile weather disturbances as well as external headwinds such as oil price increases and trade restrictions on food,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said in a statement.

Nevertheless, Balisacan said the government is proactively monitoring the supply and demand situation of key commodities to achieve its inflation target of 2% to 4% by the end of the year.

Contributors

“Ang pangunahing dahilan ng pagbagal ng antas ng inflation nitong Hulyo 2023 kasyos noong Hunyo 2023 ay ang mas mabagal na paggalaw ng presyo ng Housing, Water, Gas, and Other Fuels,” Mapa said.

(The main reason for the slowdown in inflation in July 2023 versus June 2023 was the slower movement in the prices of Housing, Water, Gas, and Other Fuels.)

The index has an inflation print of 4.5% from 5.6% in June and contributed 39.2% to the decline in the overall inflation rate. 

“Ang nag-ambag nang malaki sa pagbagal ng inflation ng Housing, Water, Electricity, Gas and Other Fuels ay ang mas mabagal na pagtaas ng presyo ng mga bayad sa kuryente, na may 7.1% inflation (from 10.3%); at renta sa bahay, na may 5% inflation (from 5.5%),” the PSA chief said.

(Largely contributing to the slowdown in inflation of Housing, Electricity, Gas and Other Fuels were the slower increase in electricity prices with 7.1% inflation and house rent with 5% inflation.)

Liquefied petroleum gas (LPG) also contributed to the index’s decline as it saw an inflation print of -12.3% from -10% in the prior month.

The second commodity group which contributed to the slower July inflation was the Food and Non-Alcoholic Beverages index with a rate of 6.3% from 6.7% and 25.1% to the overall decline.

“Ang nag-ambag ng malaki sa pagbagal ng inflation ng Food and Non-Alcoholic Beverages ay ang pagbaba ng presyo ng meat and other parts of slaughtered land animals, tulad ng manok, na may -1.7% inflation (from 0.3%),” Mapa said.

(The main contributor to the slowdown in Food and Non-Alcoholic Beverages’ inflation was the decrease in the prices of meat and other parts of slaughtered land animals, such as chicken, with -1.7% inflation.)

Also contributing to the Food and Non-Alcoholic Beverages index’s decline was the slower increase in the prices of fish and other seafood with 4.5% inflation from 6.2%. Similarly, sugar, confectionery and deserts saw an inflation print of 21.4%, down from 28.9% in June.

“Ang pangatlong nag-ambag sa pagbagal ng antas ng inflation ay ang pagbaba ng presyo ng Transport na may -4.7% inflation (from -3.1%) at 24.1% share sa pagbagal ng antas ng pangkalahatang inflation sa bansa nitong Hulyo 2023,” Mapa said.

(The third contributor to inflation decline was the decrease in Transport costs with -4.7% inflation and 24.1% share to the overall inflation deceleration in July 2023.)

This, as fares for land transport such as jeepneys saw a slower increase of 7% from 11.7%. The increase in airfares also slowed down to 5.1% from 24.6%.

The rate of increase in bus fares, likewise, dropped to 9.4% from 10.9% month-on-month.

In addition, slower annual increments were seen in the indices of the following commodity groups:

• Alcoholic beverages and tobacco, 10.9% from 11.6%
• Clothing and footwear, 4.8% from 5.1%
• Furnishings, household equipment and routine household maintenance, 5.8% from 6%
• Recreation, sport and culture, 4.7% from 4.8%
• Restaurants and accommodation services, 7.9% from 8.2%
• Personal care, and miscellaneous goods and services, 5.6% from 5.8%

Food inflation, El Niño

Food inflation, which tracks price movements in a “basket” of foods commonly purchased by households, also declined for the sixth consecutive month in July at 6.3% from 6.7% in May amid declines seen in meat, fish, and sugar prices.

Lower rates were also seen in eggs and dairy products at 9.7% from 11.2%, bread and other cereals at 10.1% from 11.0%), oils and fats at 2% from 5.6%, fruits and nuts at 8.4% from 11.4%, and ready-made food at 7.8% from 8.5%.

However, higher year-on-year growth rates were seen in rice at 4.2% from 3.6%; corn at 5.3%, same level as June’s; and vegetables, tubers, plantains, cooking bananas and pulses at 21.8% from 12.7%.

To ensure that the current weather disturbances will not have a lingering impact on inflation and the economy for the rest of the year, Balisacan said that the government has proactively taken steps to deploy its resources to affected areas as well as prepare its policy and on-the-ground response as it expects more typhoons and weather disturbances from the El Niño.

“The government will implement necessary measures to prevent price spikes, protect the purchasing power of Filipino families, and sustain our economic recovery and momentum,” the NEDA chief added.

Inflation in Metro Manila, outside NCR, bottom 30%

Inflation in the National Capital Region (NCR) recorded a flat inflation of 5.6%, the same level as seen in June.

Meanwhile, inflation in areas outside Metro Manila followed the national trend as it recorded a deceleration of 4.4% from 5.3%.

All regions outside NCR recorded slower inflation rates during the month relative to their June 2023 annual rates, according to the PSA.

Region VIII (Eastern Visayas) recorded the lowest inflation rate in July at 2.4%, while Region VI (Western Visayas) had the highest inflation rate at 5.8%.

Meanwhile, inflation felt by the bottom 30% income households also continued to slow down, recording a rate of 5.2% from 6.1% in June.

This is the lowest inflation rate observed for the income group since April 2022 with an inflation rate of 5%.

This brought the national average inflation rate from January to July this year for the  income group to 7.6%.

“In light of global climate uncertainties and food supply challenges, the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) and the Economic Development Group (EDG) held a joint meeting last July 20, 2023 to discuss proposed policy adjustments that seek to ensure a more stable supply of agricultural products to meet the demand of different users and end-consumers adequately,” Balisacan said.

“At the same time, the Committee reiterated the productivity-enhancing and efficiency-improving strategies laid out in the Philippine Development Plan 2023-2028 concerning agriculture and agribusiness. These measures aim to secure the country’s food supply, prevent sudden increases in agricultural commodity prices, improve the well-being of farmers and fisherfolk, and ensure the vital contribution of agriculture to other sectors of the economy,” the NEDA chief said. — RSJ, GMA Integrated News