Inflation quickens to 2.5 percent in June — PSA

MANILA, Philippines — The country’s headline inflation in June went up to 2.5 percent after four months of deceleration, the Philippine Statistics Authority (PSA) said on Tuesday.

This makes the year-to-date inflation for June 2020 at 2.5 percent, the PSA said in its report.

According to PSA, the “main source” of the upward trend in June inflation was the annual increase in transport index.

“The uptrend in the June 2020 inflation was primarily brought about by the annual increment in the Transport index at 2.3 percent, from a 5.6 percent annual decrease in May 2020,” it explained.

In May, inflation slowed down to 2.1 percent.

According to PSA, the higher annual rate in alcoholic beverages and tobacco index also pushed up the overall inflation for the month.

It added that annual increases in the index of housing, water, electricity, gas, and other fuels also contributed to the increase in inflation.

Meanwhile, inflation in Metro Manila climbed from 1.4 percent in May to 2 percent in June, the first month where the region was placed under the more relaxed general community quarantine amid the coronavirus pandemic.

“Inflation in the National Capital Region was pushed up by the 8.6 percent annual hike in the Transport index in June 2020, from an annual drop of 1.8 percent in May 2020,” according to PSA.

Inflation in areas outside the National Capital Region likewise, accelerated to 2.7 percent in June from 2.2 percent in May.

The June inflation was within the Bangko Sentral ng Pilipinas’ earlier forecast of 1.9 to 2.7 percent inflation rate for the month.

“The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation pressures remain limited due largely to the adverse impact of COVID-19 pandemic and on the domestic and global economic conditions,” the BSP said in a statement after the release of the PSA report.

The BSP expects inflation to average at 2.3 percent in 2020, 2.6 percent in 2021, and 3 percent in 2022.

“Domestic economic activity is projected to follow a U-shaped quarterly recovery path with output likely to contract further in the remaining quarters of 2020. Growth is expected to recover in 2021 once the impact of government policy support measures gains traction,” it said.

“Meanwhile, the outlook for the global economy has further deteriorated with considerable uncertainty brought about by the magnitude and duration of containment measures across all economies,” the BSP added.

JPV