Cost of goods and services in the country accelerated for the month of July, driven primarily by higher transportation costs.
Data from the Philippine Statistics Authority (PSA) show July inflation settling at 2.7 percent, higher than the recorded 2.5 percent month-ago and 2.4 percent in July 2019.
Year-to-date inflation still stands at 2.5 percent, well within the government’s 2 to 4 percent target range for the year.
National Statistician Dennis Mapa said that the higher transportation cost recorded for the month drove the increase with tricycle fares growing to 33.9 percent from just 26.8 percent month-ago.
Domestic airfares and ship fares likewise accelerated to 12.6 percent and 27.7 percent respectively, from the recorded 0.2 percent and 0 percent in the comparable period last year.
Inflation in the National Capital Region (NCR) shared the same trend with 2.2 percent in July from the posted 2 percent in the previous month owing to the same factor, the spike in transportation costs.
The PSA chief noted that tricycle fares for NCR hiked by more than twice as it averaged P17 for the month versus the P8.50 average year-ago.
“This will continue and the transportation basket of the consumer price index will experience an uptick on the inflation rate,” Mapa said.
For areas outside NCR, inflation also manifested an uptick from 2.7 percent to 2.9 percent month-on-month.
Bottom 30% inflation lower
On the other hand, inflation for the bottom 30 percent income households showed a reduction to 2.9 percent from 3 percent in June owing to the slower annual rate observed in the heavily-weighted food and non-alcoholic beverages.
The PSA chief explained that inflation for the bottom 30 percent income households were lower given the lower impact of transportation costs to the basket.
“Food inflation has a bigger weight. That has a big impact for the bottom 30 percent households. For transport, its share to total is just 4.8 percent,” Mapa explained partly speaking in Filipino.
According to him, food and non-alcoholic beverages account for more than half or 58 percent of the inflation for the bottom 30 percent income households.
Risks to remain
While consumer prices were eyed to remain manageable for throughout the year, Acting Socioeconomic Planning Secretary Karl Kendrick Chua said that “upside risks” to inflation can’t be ruled out of the picture yet.
“Although we expect that the overall consumer prices will remain benign until 2021, we recognize that the upside risks to inflation outlook still remain,” Chua said.