MANILA, Philippines – Inflation remained at the same level in July as it did last month, prompting the National Economic Development Authority (NEDA) to predict that it will be remain stable for the rest of 2016.
Data released by the Philippine Statistics Authority (PSA) on August 5 showed that inflation was at 1.9% in July. Core inflation, which excludes selected volatile food and energy prices, was also at 1.9%.
“The steady inflation in July is due to slower increases in food prices, which were able to offset higher electricity charges,” said Socioeconomic Planning Secretary Ernesto Pernia.
The inflation figure is within the Bangko Sentral ng PIlipinas’ (BSP) forecast of 1.5% to 2.4% for the month, and hit the median market expectation of 1.9%.
July’s figure means that headline inflation for January to July 2016 averaged 1.4% which is below the low end of the government’s inflation target of 2% to 4%.
Pernia said NEDA now expects full-year inflation to average around 1.98% based on the manageable levels observed in the past 7 months.
The factors behind the forecast, he explained, are expanding productive capacity of the domestic economy, persistent low oil prices, solid private household consumption and investment, buoyant business and consumer sentiment, and adequate credit and domestic liquidity.
Food prices down
Food inflation slowed to 2.8% in July from 3% in the previous month due to a slowdown in inflation among commodity sub-items like meat and vegetables.
The prices of milk, cheese, and eggs remained constant, while prices of fish, breads, and cereals increased slightly, though not enough to affect the average price for the overall food group.
Inflation for food staple rice increased to 0.4% from 0.2% in June, which NEDA said may be attributed to declining harvests as July marks the start of the lean months for rice.
Inflation in the non-food group stayed the same at 0.9% in July. This was driven mainly by slight increases in prices of housing, water, electricity, gas and other fuels, which were mitigated by slower inflation for other sub-commodities like education and health.
NEDA noted, however, that international oil prices increased from the previous quarter despite global oil prices remaining below 2015 levels due to brighter prospects of a pickup in global oil consumption, and a slowdown in crude oil production.
“In order to reduce potential sources of upside price pressures, we also need to ensure that prices of utilities such as electricity and water are stable. Existing petitions for upward adjustment in power prices should be reviewed thoroughly,” Pernia said. – Rappler.com