Still higher inflation in July

“Rice prices for the period also averaged higher to 4.8 percent from 4.67 percent.

Headline inflation likely climbed higher in July to 5.3 percent, mostly on the basis of food inflation having also pushed higher during the month, the Department of Finance (DoF) said on Friday.

In its latest bulletin, the DoF said that from only 5.2 percent in June, commodities prices were seen at a higher plane as food inflation likely ramped up 6.12 percent in July from only 6.07 percent in June.

The food component of the consumer price index (CPI) accounts for more than half of the basket of services and goods regularly surveyed by the Philippine Statistics Authority.

The non-food component of the CPI was similarly seen climbing from 4.03 percent to 4.25 percent.

These numbers, while preliminary, indicate some disanchoring in prices as the confluence of domestic and global events contributed to higher headline inflation.

According to the DoF, vegetable prices were estimated to have significantly climbed an average 11.85 percent in July from only 8.63 percent in June, along with the tobacco component also seen averaging higher to 29.36 percent from 28.29 percent.

Rice prices for the period also averaged higher to 4.8 percent from 4.67 percent, the DoF said.

On the aggregate, food and non-alcoholic beverages contributed 2.43 percent to the forecast headline inflation in July.

The non-food component of the CPI, on the other hand, contributed 4.25 percent to the July inflation survey from only 4.03 percent the previous June.

The electricity, gas and other fuels component contributed the most to inflation during the month averaging 10.77 percent from 9.37 percent, as did clothing and communications which contributed 2.31 percent and 0.42 percent, respectively.

Inflation, which limits the purchasing power of the consumer and dampens the incentive to save, first breached the target celing of only 4 percent in March when this averaged 4.3 percent and has not come down ever since.

But finance and monetary officials have since discounted the likelihood of high and persistent inflation over the next 18 to 24 months, saying such resulted from the one-off impact of higher excise tax on fuel and sugar-sweetened beverages under the Tax Reform for Acceleration and Inclusion or TRAIN Act that took effect last January.

Thus far, headline inflation averaged 4.3 percent in the first six month, substantially above the 2 to 4 percent target rate plotted much earlier by the economic managers.

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