July inflation rises to 4.4%

Headline inflation in July accelerated due to higher food and utility costs, the Philippine Statistics Authority (PSA) said on Tuesday.

Preliminary data from PSA showed that the country's headline inflation — which measures the rate of increase in the prices of goods and services — revved to 4.4 percent in July, faster than the previous month's 3.7 percent rate.

The latest figure made the inflation rate for the year so far at 3.7 percent, which is still below the government's target range of 2 percent to 4 percent.

July's inflation rate also fell within Bangko Sentral ng Pilipinas (BSP)'s month-ahead forecast at 4 percent and 4.8 percent,but breached the central bank’s 2 to 4 percent target range for the year.

PSA attributed the increase in July's headline inflation rate to higher prices for both food and non-food things. Prices for housing, utilities, fuel, meat, corn, and fruits all went up significantly.

On the other hand, core inflation — which excludes certain food and energy commodities with volatile prices — slowed down from 3.1 percent in June 2024 and from 6.7 percent in July 2023 to 2.9 percent in July 2024.

Typhoon's effect on food

In a press briefing, PSA Chief and National Statistician Dennis Mapa said food prices increased from 6.5 percent in June to 6.7 in July as recent natural disasters have affected farm goods.

Data broken down, meat prices went up month-on-month from 3.1 percent to 4.8 percent, corn from 13.1 percent to 17.5 percent, fruits from 5.6 percent to 8.4 percent, eggs and other dairy products from 1.3 percent to 1.8 percent, and ready-made foods from 5.9 percent to 6.0 percent.

However, rice inflation decreased to 20.9 percent in July from 22.5 percent in June.

While the decrease in the rice tariff might keep inflation from increasing, Mapa said Typhoon Carina (Gaemi) and the devastating impact of the southwest monsoon possibly caused prices to rise again.

"(The) impact (of typhoon Carina) may have already started. But the expectation is that, based on our historical data, after a typhoon, the price of vegetables usually increases," Mapa said.

“It’s possible for a substantial reduction in rice prices in August,” Mapa added.

Non-food rates

Meanwhile, PSA said transportation inflation increased to 3.6 percent in July from 3.1 percent in June due to rising price of petroleum globally, which was caused by the unexpected large withdrawals of US gasoline stocks, optimistic forecasts for fuel demand, and the ongoing geopolitical tensions in the Middle East.

The inflation rate for housing and utilities increased to 2.3 percent from 0.1 percent, while the inflation rate for electricity decreased to -5.4 percent from -13.7 percent.

This shift is linked to the increase in liquefied petroleum gas (LPG) international contract prices as well as Meralco's July rate increase.

Following a staggered collection of May generation costs authorized by the Energy Regulatory Commission, the Wholesale Electricity Spot Market charges stabilized.

Monetary rate

Meanwhile, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona told reporters on Tuesday that a rate cut in August will be "a little bit less likely since inflation is elevated."

"It's still worse than expected, but not that bad," Remolona said.

The policy rate, which has been maintained at 6.5% for the past six sessions, will be reviewed by the monetary authorities when they convene on 15 August.

Remolona's comments before the inflation figures were seen by market observers as possibly indicating a cut.

Nicholas Mapa, economist at Metropolitan Bank and Trust Co., stated on X that the central bank "could still likely opt to ease at their upcoming meetings to support growth" even though inflation is expected to decline in the upcoming months.