The Department of Finance (DOF) expects headline inflation to further ease as prices of nonfood products and services, which had not been as volatile as food and fuel, softened.
In an economic bulletin on Friday, Gil Beltran, finance undersecretary and chief economist, noted that in July, the return to within-target year-on-year inflation rate at 4 percent was mainly a result of decelerating nonfood prices, which offset the uptick in food prices.
Beltran said the slower 3.17-percent nonfood inflation last month, compared to the 3.37 percent in June, came on the back of slower hikes in transportation costs and housing rentals, even as increases in oil and utility costs surged to 6.46 percent from June’s 3.38 percent.
In the case of food, more expensive vegetables due to the adverse effects of Typhoon “Fabian” offset the slower but still high meat inflation (15.98 percent year-on-year in July against 19.24 percent in June), and the decline in rice prices compared to a year ago.
While average prices in July of the items in the consumer price index (CPI) basket inched up by 0.39 percent compared to June levels, core inflation—which excluded food and oil—further eased to 2.92 percent, Beltran said.
He said the lower core inflation “may indicate deceleration in inflation rates in the coming months.”
Beltran said recent government policies, which allowed more importation of pork and rice with lower tariffs and bigger quotas augured well to stabilizing food prices in the near term.
“Meat prices dropped due to the easing of meat imports under Executive Order No. 128. Meanwhile, higher rice supply from a better harvest and the impact of the Rice Tariffication Law continued to dampen rice prices,” Beltran said. Rice harvest rose 8.6 percent in the first quarter.