The pace at which the prices of local goods and services increase softened in June, registering just a tad higher than the upper-end of the government’s 2 to 4 percent target.
Latest data from the Philippine Statistics Authority (PSA) show that the 4.1 percent inflation in June brought the year-to-date figure to 4.4 percent.
Nevertheless, the latest print was better than the recorded 4.5 percent in May 2021 but significantly higher than the 2.5 percent in June 2020.
National Statistician Claire Dennis Mapa attributed the deceleration in inflation to the decrease in Transport prices, which recorded an inflation rate of 9.6 percent and contributed 95.4 percent in the overall price basket.
Tricycle fares registered an inflation of just 17.6 percent in June from the listed 38.8 percent in May while petroleum and fuels posted only 21.5 percent increase from the registered 33 percent in the same comparable period, Mapa explained.
Still, the PSA chief noted that inflation in the National Capital Region (NCR) slowed to 3.2 percent in June 2021 from the 3.6 percent month-ago, still owing to the deceleration in transport prices.
Likewise, areas outside NCR posted an inflation of just 4.4 percent from the 4.7 percent in the previous month amid the observed reduction in key food items such as rice, fruits and vegetables.
According to Mapa, inflation for the bottom 30 percent income households also softened to only 4.3 percent in June 2021 from the reported 4.5 percent in May 2021.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said that the latest inflation figure remains within their expected forecast range, affirming their outlook that inflation could remain elevated in the near-term.
“Average inflation is projected to settle at the high-end of the target range of w to 4 percent in 2021. However, price pressures are seen to abate leading to the reversion of average inflation near the midpoint of the target in 2022 to 2023,” Diokno told reporters in a viber message.
“The effective implementation of direct non-monetary measures will be crucial in mitigating further supply-side pressures. The risks to the inflation outlook remain broadly balanced,” he added.
According to him, the uptick in international commodity prices along with the recovery in global demand could place upward pressures on inflation.
However, downside risks could come from the emergence of new COVID-19 variants, which could delay the easing of lockdown measures and temper domestic recovery prospects, Diokno said.
“The BSP remains watchful over the evolving economic conditions and challenges brought about by the pandemic to ensure that the monetary policy stance remains consistent with its price and financial stability objectives,” he concluded.
Socioeconomic Planning Secretary Karl Kendrick Chua stressed that the state’s policy interventions are now taking effect, as reflected in the latest inflation print.
“Recent policies to increase food supply are beginning to bring down inflation. Rest assured that the government will continue to address constraints in the availability and movement of goods amid quarantine restrictions to ensure that households have access to affordable food,” Chua said.
According to him, the recent move to allow higher pork imports coupled with the tariff rate for such, helped bring down meat inflation and was expected to be further brought down in the second semester of the year.
“In managing inflation, our priority will be to continue improving our domestic production and providing needed support to our farmers and producers. When necessary, we will augment supply with importation to keep prices stable and to guarantee food security. This balancing act will help us better manage the impact of inflation on the people and the economy,” he explained.