Inflation cools to 2-year low 2.4% in July

by Czeriza Valencia (The Philippine Star), Aug 7, 2019

MANILA, Philippines — Growth in consumer prices further eased to 2.4 percent in July, the slowest in two years, on the back of cheaper rice, fuel and utilities, the Philippine Statistics Authority (PSA) said in a report yesterday.

July’s headline inflation slid further from 2.7 percent in June and 5.7 percent a year earlier, bringing the year-to-date average to 3.3 percent, still well within the government’s target range of two to four percent this year.

This was the lowest level since also hitting 2.4 percent in July 2017.

In a briefing, National Statistician Dennis Mapa said inflation is expected to sustain its slowdown or stabilize in the coming months, noting that declines to flat growth were seen in price movements across commodity groups in July.

Price drops were most pronounced in the heavily weighted food and non-alcoholic beverage index, which slowed to 1.9 percent in July from 2.7 percent in June.

Likewise, the index of housing, water, electricity, gas and other fuels eased to 2.2 percent in July from three percent in June; as well as in transport, which slowed down to 0.7 percent in July from 1.6 percent in June.

In particular, index-heavy rice prices contracted for the third straight month to 2.9 percent in July. The last time rice prices declined was in June 2016.

Growth in the prices of vegetables also declined significantly to 3.4 percent in July from 9.5 percent in June.

Declines were also recorded in the cost of power as well as in liquefied petroleum gas at negative 0.5 percent and negative 5.9 percent, respectively.

In transport, the index for petroleum for personal transport declined by 2.8 percent while that for domestic airfare declined by 11.5 percent.

Consumer prices grew slower both within the National Capital Region (NCR) and areas outside NCR at 2.3 percent and 2.4 percent, respectively in July, from three percent and 2.6 percent, respectively in June.

In regions excluding the NCR, inflation remained steepest in the Mimaropa region at 4.9 percent and lowest in Central Visayas at 1.1 percent.

Mapa said inflation in Mimaropa defies the national trend primarily because of logistical issues in the distribution of goods and services.

“We observed that in the regional inflation in 2019, MIMAROPA is quite an outlier for this year. One particular reason we are seeing is because MIMAROPA consists mainly of island provinces so transportation may have an impact on goods and services. This could be validated on the ground. The reason why we are reporting MIMAROPA is so that local government units can check and do something about it,” he said.

The National Economic and Development Authority (NEDA) said that with the continued deceleration in the headline inflation rate, the government expects the annual average to settle within the target range.

“We welcome this decelerating trend in prices but we remain on guard against possible upside risks such as adverse weather conditions, possible entry of the African swine fever, and uncertainty in the global oil market, among others,” said Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia.

Citing a report from the weather bureau, he noted that prevailing monsoon season is seen lasting until September, during which six up to nine tropical cyclones are expected to enter the country in the third quarter. Still, in the fourth quarter, three up to five cyclones may visit the country.

“Government agencies such as Department of Agriculture, Department of Trade and Industry, and the National Food Authority should ensure sufficient supply of basic food commodities, in view of the expected tropical cyclones that will enter the Philippine area of responsibility,” said Pernia.

He also urged the concerned government agencies to intensify market surveillance amid the temporary ban imposed by the Food and Drug Administration (FDA) on the importation of pork products from countries with reported cases of African swine fever (ASF).

These include Hong Kong, North Korea, Germany and 17 other countries.

“The concerned authorities should intensify its market surveillance to ensure the compliance of importers and retailers with the government’s directive. The government should also ensure that there is sufficient production of pork and other meat products locally as the threat of the epidemic is seen to continue in the near term,” Pernia said.