June inflation hits 22-month low

Inflation in June slowed to 2.7 percent year-on-year, the slowest rate of increase in prices of basic goods in 22 months, mainly due to base effects, lower educational costs arising from the government’s free tuition program and the decline in rice prices.

Philippine Statistics Authority (PSA) data released on Friday showed that June’s headline inflation rate was the lowest since the 2.6 percent posted in August 2017.

In the first half, inflation averaged 3.4 percent, within the government’s 3 to 4 percent target range for the entire 2019.

National Statistician Claire Dennis S. Mapa told a press conference that rice prices continued to decline, posting a 1.7-percent year-on-year drop in June after a 0.7-percent decline in May.

Mapa said the Rice Tariffication Law being implemented since March, which slapped tariffs on all rice imports as it liberalized rice trade, was a major contributor to the lower prices of the Filipino staple food.

Also, year-on-year corn prices declined while increments in the prices of meat, fish, vegetables, sugar, jam, honey, chocolate and confectionery eased.

Education costs also declined by 4.5 percent in June as students at SUCs have been enjoying the free tuition program, Mapa said.

Mapa later told reporters that since it was during the second half of last year that inflation surged, the rates in the coming months were expected to be at about the same level as in June.

To recall, it was in June last year when the headline rate breached the 5-percent level amid higher excise taxes slapped on consumption, elevated global prices, and domestic food supply bottlenecks, especially of rice.

In June, slower year-on-year price increases were also noted in the following commodity groups: alcoholic beverages and tobacco; housing, water, electricity, gas, and other fuels; furnishing, housing equipment and routine maintenance of the house; transport, and communication.

Month-on-month, inflation slowed to 0.2 percent in June from 0.3 percent in May.

In an economic bulletin, Finance Undersecretary and chief economist Gil S. Beltran noted that “the streamlining of food supply continues to drive down food inflation.”

“Lower petroleum prices in the previous month also helped tame non-food inflation,” Beltran added.

Beltran said the easing of inflation alongside the full implementation of the P3.7-trillion 2019 national budget would enable the government to boost economic growth in the next quarters.

Last year, annual gross domestic product (GDP) growth slowed to a three-year low of 6.2 percent as headline inflation accelerated to a 10-year high of 5.2 percent in 2018.

First-quarter GDP growth, meanwhile, fell to a four-year low of 5.6 percent, below the government’s downgraded 6-7 percent target range for 2019, due to the delayed approval of this year’s appropriations.