Inflation rate accelerates to 5.2% in June
Published Jul 5, 2018 12:00 am
By Chino S. Leyco
The rate of increase in consumer prices “unexpectedly” accelerated beyond expectations, sustaining its rise for the sixth straight month in June owing to higher costs of food and “sin” products, the Philippine Statistics Authority (PSA) said yesterday.
The country’s inflation rate on-year jumped by 5.2 percent last month, the highest in the last five years and well above the 4.8 percent that economists predicted, along with the Department of Finance’s (DOF) estimate of 4.9 percent, and the Bangko Sentral ng Pilipinas’ (BSP) forecast of 4.3 percent to 5.1 percent.
The rise in consumer prices was the fastest since at least January, 2013. It was also the fourth straight month that inflation breached the top end of the BSP's 2.0 percent to 4.0 percent target for the full year.
The June inflation brought the first-semester average at 4.3 percent.
In a briefing, Socioeconomic Planning Secretary Ernesto M. Pernia said the high inflation is due to faster price increases in food, fuel and transport, as well as external actors, such as world oil prices, peso depreciation, and price of rice.
“We remain hopeful that inflation is kept at bay and will taper off by year-end,” Pernia said.
Last month, prices of alcoholic beverages and tobacco climbed 20.8 percent; housing, water, electricity, gas, and other fuels, rose 4.6 percent; furnishing, household equipment and routine maintenance of the house, jumped 3.0 percent.
Likewise, transport increased 7.1 percent; communication, up 0.4 percent; and education rose 4.0 percent.
“We expect inflation to peak in the third quarter and taper off by October, government needs to implement necessary measures, both short-term and long-term, to address the impact of inflation,” Pernia said.
“An important and urgent challenge to manage inflation is actually the need to increase the supply of goods and services, especially food — in particular, rice, which takes up a large chunk of the food budget of poor families. When demand outweighs supply, naturally prices go up,” he added.
Meanwhile, Pernia said that the BSP could be behind the curve in terms of policy settings.
“They may have been a little bit of a slip in timing in increasing policy rates,” Penia said.
Asked if the above target inflation warrants another increase in policy rates, Pernia said “that will be a decision to be made by the BSP, so we don’t want to preempt what there are thinking of.”
“We expect inflation to normalize by the end of the year. We remain optimistic that we can meet our medium-term economic growth target of 7 to 8 percent, even while taking note of growth risks that we need to manage,” Pernia said.
Rising inflation, blamed on higher taxes on fuel and other commodity items, a weak peso, and firmer global oil prices, has prompted the central bank to raise interest rates in May and in June.
While the rise in consumer prices is largely supply-driven, the central bank has said a tighter monetary policy was needed to keep inflation expectations from spiking.
The rate of increase in consumer prices “unexpectedly” accelerated beyond expectations, sustaining its rise for the sixth straight month in June owing to higher costs of food and “sin” products, the Philippine Statistics Authority (PSA) said yesterday.
The country’s inflation rate on-year jumped by 5.2 percent last month, the highest in the last five years and well above the 4.8 percent that economists predicted, along with the Department of Finance’s (DOF) estimate of 4.9 percent, and the Bangko Sentral ng Pilipinas’ (BSP) forecast of 4.3 percent to 5.1 percent.
The rise in consumer prices was the fastest since at least January, 2013. It was also the fourth straight month that inflation breached the top end of the BSP's 2.0 percent to 4.0 percent target for the full year.
The June inflation brought the first-semester average at 4.3 percent.
In a briefing, Socioeconomic Planning Secretary Ernesto M. Pernia said the high inflation is due to faster price increases in food, fuel and transport, as well as external actors, such as world oil prices, peso depreciation, and price of rice.
“We remain hopeful that inflation is kept at bay and will taper off by year-end,” Pernia said.
Last month, prices of alcoholic beverages and tobacco climbed 20.8 percent; housing, water, electricity, gas, and other fuels, rose 4.6 percent; furnishing, household equipment and routine maintenance of the house, jumped 3.0 percent.
Likewise, transport increased 7.1 percent; communication, up 0.4 percent; and education rose 4.0 percent.
“We expect inflation to peak in the third quarter and taper off by October, government needs to implement necessary measures, both short-term and long-term, to address the impact of inflation,” Pernia said.
“An important and urgent challenge to manage inflation is actually the need to increase the supply of goods and services, especially food — in particular, rice, which takes up a large chunk of the food budget of poor families. When demand outweighs supply, naturally prices go up,” he added.
Meanwhile, Pernia said that the BSP could be behind the curve in terms of policy settings.
“They may have been a little bit of a slip in timing in increasing policy rates,” Penia said.
Asked if the above target inflation warrants another increase in policy rates, Pernia said “that will be a decision to be made by the BSP, so we don’t want to preempt what there are thinking of.”
“We expect inflation to normalize by the end of the year. We remain optimistic that we can meet our medium-term economic growth target of 7 to 8 percent, even while taking note of growth risks that we need to manage,” Pernia said.
Rising inflation, blamed on higher taxes on fuel and other commodity items, a weak peso, and firmer global oil prices, has prompted the central bank to raise interest rates in May and in June.
While the rise in consumer prices is largely supply-driven, the central bank has said a tighter monetary policy was needed to keep inflation expectations from spiking.