MANILA, Philippines—The prices of services and goods consumed by an average Filipino household went up by 11.4 percent in June from a year earlier—the fastest rate recorded in 14 years—due largely to the substantial increase in the cost of rice and other food products, the National Statistics Office reported Friday.

The price of rice soared by 43 percent because of growing demand and increased costs of inputs. This means that the rice a consumer bought for P100 in June last year may be had for P143 last month.

Prices of food products included in the Filipino consumer basket rose by 17.4 percent. This means food products that had cost P100 in June last year, cost P117.4 last month.

“June inflation rose to a double-digit on account of the unprecedented jump in world oil prices,” Governor Amando Tetangco Jr. of the central bank, Bangko Sentral ng Pilipinas (BSP), told reporters. “As a result, domestic pump price increases triggered large price buildup across wide commodities and services groups.”

The June inflation rate exceeded the BSP forecast of 10.4-11.2 percent and the 9.5 percent recorded in May.

For the January-June period, inflation averaged 7.6 percent, way above the government’s full-year target of 3.0-5.0 percent.

Core inflation, which excludes prices of volatile food and energy items, rose to 6.6 percent in June from 6.2 percent in May.

The faster increase in overall inflation is largely blamed on the relentless rise in the price of oil. Global crude oil prices reached $145 a barrel for the first time Thursday.

The BSP warned that commodity and oil prices were still on their way up and would peak in the third quarter.

It said inflation would start to moderate in the fourth quarter and throughout 2009.

Benjamin Diokno, economics professor at the University of the Philippines, said rice had been gravely affected by rising oil prices.

“Oil dependency is a major cause for increase in prices,” Diokno said in an interview with the Philippine Daily Inquirer. “In the case of rice, prices have increased significantly because 40 percent of inputs are oil-based, such as fertilizers and pesticides.”

Diokno said the increasing global demand for rice was also to blame. He said the populations of India and China—both rice-eating countries—were growing significantly. The two countries together have a headcount of around 2.5 billion.

Because the Philippines is a rice importer, one of the biggest in the world, it is vulnerable to price increases in the world rice market.

Diokno warned that the increase in food prices could drive more people to privation, rubbing salt on the wounds of those who already are living below the poverty line.

He noted that food accounted for 60 percent of a poor household’s consumption.

Rice alone accounts for 20 percent of a poor family’s consumption, he noted.

In 2006, 32.9 percent of the population, or 27.6 million Filipinos, lived below the poverty line, based on the latest report of the National Statistical Coordination Board. The poverty incidence in 2006 was worse than in 2003, when there were only 23.8 million poor Filipinos, roughly 30 percent of the population.

“Poor Filipinos are now faced with the double whammy of higher food prices and less opportunity for work,” Diokno said.

He noted that the unemployment rate, or the proportion of jobless Filipinos to total labor force, stood at 8 percent in April from 7.4 percent in the same month last year.

He suggested that the government implement projects that would improve irrigation and infrastructure in rural areas. This way, the government would provide more jobs and help improve farm production.

Malacañang assured the nation Friday that it would continue to come up with measures to help people cope with rising oil and food prices.

Cabinet Secretary Ricardo Saludo said the current inflation surge only showed the importance of “government-sectoral cooperation to curb price hikes.”

At present, the government plans to use P4 billion generated from the value-added tax on oil to help destitute electricity users and poor students in their struggle to cope with rising prices, Saludo said.

In particular, jeepney drivers would be given assistance to convert their engines from diesel into those that run on liquefied petroleum gas.

The government, through the Department of Agriculture, would also help farmers boost rice and food production through a P43-billion program for providing inputs and facilities.

“We must join hands to rein in prices,” Saludo said in a statement.

Deputy presidential spokesperson Lorelei Fajardo said the central bank was studying options to help curb the rise in inflation.

Fajardo urged manufacturers to be “sensitive” to the consuming public and warned that government “will not tolerate hoarders and vultures who will prey” on them.

Inflation rates for other commodity groups were recorded as follows: food beverage and tobacco, 16.5 percent, up from 13.6 percent in May; clothing, 4.2 percent from 4 percent; housing and repairs, 4.3 percent from 4 percent; services, 9.9 percent from 7.8 percent; and miscellaneous items, 2.9 percent from 2.7 percent.

Inflation for other food products were as follows: corn, 34.3 percent in June from 27.1 percent in May; cereal preparations, 16.6 percent from 15.3 percent; fish, 10.8 percent from 9.6 percent; fruits and vegetables, 12.5 percent from 10.1 percent; meat, 11.4 percent from 10.4 percent; and miscellaneous foods, 8.3 percent from 7.6 percent. Dairy products and eggs registered a slowdown, at 13.5 percent and 7.5 percent from 13.7 percent and 7.7 percent, respectively.

The central bank, which has inflation as the target of its policies, hinted it was prepared to take action, such as by raising again its interest rates at the next meeting of its policymaking Monetary Board.

The BSP’s overnight borrowing rate currently stands at 5.25 percent and its overnight lending rate at 7.25 percent.

“Demand pressures will moderate as monetary policy is generally tightened,” BSP Governor Tetangco said.

An increase in the BSP’s interest rates helps curb inflation. With a higher borrowing rate, banks would get more in terms of yield when they deposit their money with the BSP. With reports from Christine O. Avendaño, Agence France-Presse, Reuters; with editing by INQUIRER.net