The inflation rate in July likely rose to 5.3 percent year-on-year, the highest in more than five years, mainly on the back of higher cigarette prices, although the average increase in consumer prices that month was slower than in June, the Department of Finance said yesterday.
The rate of increase in prices of basic goods in July was seen faster than the 2.4 percent posted in the same month last year, the lowest monthly headline inflation rate in 2017, hence a low base.
In an economic bulletin, Finance Undersecretary and chief economist Gil S. Beltran noted that on a month-on-month basis, commodity prices this month inched up by an average of only 0.17 percent compared to June prices, slower than the 0.6 percent last month.
The lower month-on-month prices increases were observed both on food (up only 0.04 percent in July from the 0.74-percent increase in June) and non-food items (up 0.22 percent compared to June’s 0.45-percent increase).
While price increases for most commodity groups slowed month-on-month compared to June, the following items bucked the trend: Tobacco; housing, utilities and fuels, and health.
In particular, prices of electricity, gas and other fuels rose 0.95 percent month-on-month in July, faster than the 0.1 percent in June, which Beltran blamed on “lagged impact of petroleum products on electricity prices.”
On a year-on-year basis, prices of electricity, gas and other fuels increased 10.77 percent in July, faster than the 9.37 percent in June.
Prices of tobacco products jumped 29.36 percent year-on-year in July—the fastest climb across all commodity groups— from 28.29 percent a month ago and 8.58 percent a year ago.
Month-on-month, tobacco prices also posted the fastest increment of 1.23 percent from 0.62 percent in June.
To recall, the cigarette excise tax further increased to P35 per pack starting July under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
On Jan. 1, the unitary excise tax slapped on cigarettes rose to P32.50 per pack from P30 a pack last year.
From January to June, the headline inflation rate averaged 4.3 percent, already breaching the government’s full-year target range of 2-4 percent for 2018.
Economic managers projected inflation at 4 percent to 4.5 percent by the end of the year.