Inflation rate accelerated to 4.4% in July —PSA

Inflation rate increased in July after a slowdown in June amid faster rise in utilities, food, and transportation costs during the period, according to the Philippine Statistics Authority (PSA) on Tuesday.

At a press conference, National Statistician and PSA chief Claire Dennis Mapa said inflation — which measures the rate of increase in the prices of goods and services — accelerated to 4.4% last month, faster than the previous month's 3.7% rate.

This brought the year-to-date inflation print to clock in at 3.7%, still within the government’s ceiling of 2% to 4%.

It also fell within the Bangko Sentral ng Pilipinas’ (BSP) 4% to 4.8% forecast range. 

“Ang pangunahing dahilan ng mas mataas na antas ng inflation nitong Hulyo 2024 kaysa noong Hunyo 2024 ay ang mas mabilis na pagtaas ng presyo ng Housing, Water, Electricity, Gas and Other Fuels sa antas na 2.3% [from 0.1% in June],” Mapa said.

(The main reason for the higher inflation rate in July 2024 versus June 2024 was the faster increase in the prices of Housing, Water, Electricity, Gas, and Other Fuels with a rate of 2.3%.)

The PSA chief said the utilities index contributed 70.4% to the overall inflation rate for July.

Mapa said the slower decline in electricity prices at -5.4% from -13.6% in June was the primary contributor in the higher inflation for the utilities group as well as the faster rise in liquefied petroleum gas (LPG) cost at 20.2% from 14.7% month-on-month.

“Ang pangalawang dahilan ng mas mataas na antas ng inflation nitong Hulyo 2024 kaysa noong Hunyo 2024 ay ang mas mabilis na pagtaas ng presyo ng Food and Non-Alcoholic Beverages,” the PSA chief said.

(The second reason for the higher inflation rate in July 2024 compared to June 2024 was the faster increase in the prices of Food and Non-Alcoholic Beverages.)

The Food and Non-Alcoholic Beverages index saw an inflation rate of 6.4%, up from 6.1% in June. It accounted for 17% of the overall uptrend.

The faster increase in meat prices at 4.8% from 3.1%, fruits and nuts at 8.4% from 5.6%, as well as the slower decline in fish and other seafood cost at -0.8% from -1.4% contributed to the faster inflation in the Food and Non-Alcoholic Beverages index.

The third commodity group which contributed to the faster inflation rate in July was Transport with an outturn of 3.6% from 3.1%, accounting for 6.8% of the overall increment.

This was due to the swifter rise in gasoline prices during the month at 5.4% from 2.3% as well as diesel, which saw an increase of 9.2% from 8.2%.

Food inflation

Moreover, food inflation, which tracks the movement of food items in a “basket” commonly purchased by households, rose to 6.7% in July from 6.5% in June — indicating that food prices remain elevated.

The higher food inflation was attributed to faster increases in meat and fruits prices.

Faster increments were also seen in the corn at 17.5% from 13.1%; milk, other dairy products, and eggs at 1.8% from 1.3%; and ready-made food at 6% from 5.9%.

Rice inflation, meanwhile, saw a decline to 20.9% from 22.5% in June.

While rice inflation slowed, it remained a top contributor to the overall July inflation with 1.9 percentage points.

Likewise, flour, bread, and cereals eased to 2.6% from 3% while vegetables, tubers, plantains, cooking bananas, and pluses also slowed down to 6.1% from 7.2%.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the government is implementing crucial interventions to support the most vulnerable sectors and ensure food security amid the ongoing La Niña phenomenon and the higher inflation recorded in July 2024.

“The government is relentlessly working to address our nation’s most pressing concern of ensuring food security for every Filipino amid the faster rise in prices in July and the expected typhoons and rains due to the onset of La Niña this August,” Balisacan said.

The NEDA chief added that the weather phenomenon is expected to persist until the first quarter of 2025.

Inflation in Metro manila, outside NCR

Following the national trend, inflation in Metro Manila also accelerated to 3.7% from 2.3% on the back of higher utilities cost at 3.3% from 1.7% and faster increase in transport prices to 3.5% from, 2.9%.

For areas outside the National Capital Region, the overall inflation rate stood at 4.6% from 4.1% month-on-month also on the back of faster rise in utilities cost and food at 1.9% (from 0.7%) and 6.6% (from 6.3%), respectively.

Inflation for bottom 30%

Inflation felt by the bottom 30% income households in the country also traced the national trend as it grew to 5.8% from 5.5%.

The main driver for the inflation uptrend for the income class was due to higher utilities cost at 1.8% from 0.7%.

Food and Non-Alcoholic Beverages index also contributed to the inflation growth for the income group with a rate of 8.3% from 8%.

Transport cost for the bottom 30% households also rose to 3.6% from 3% month-on-month.

Education services for the income group also increased to 5.8% from 4.2% in June.

Outlook

The BSP said that the balance of risks to the inflation outlook has shifted to the downside for 2024 and 2025 due largely to the impact of the lower import tariff on rice under Executive Order 62, series of 2024.

“Nonetheless, higher prices of  food items  other than rice, as well as higher transport and electricity charges continue to pose upside risks to inflation,” the central bank said.

The BSP said the Monetary Board will consider the latest inflation outturn as well as the second quarter 2024 national accounts in its assessment of the inflation outlook and the balance of risks in the August 2024 monetary policy meeting.

“Moving forward, the BSP will ensure that monetary policy settings remain in line with its primary mandate to safeguard price stability conducive to sustainable economic growth,” it said. —KBK/RSJ, GMA Integrated News