Consumer prices rose at a slower pace last month, sliding back within the government’s target range for the first time this year, owing to easing price hikes for transportation, the Philippine Statistics Authority (PSA) reported.

National Statistician Claire Dennis Mapa said Thursday, August 5, that prices increased 4.0 percent in July, slightly lower than 4.1 percent seen in June, but still higher than the 2.7 percent rise of a year ago.

Last month's average price increase was at the high-end of a government full-year target band of 2.0 percent to 4.0 percent, and within the Bangko Sentral ng Pilipinas (BSP) forecast range for the month of between 3.9 percent and 4.7 percent.

The July figure caused the seven-month average to clock in at 4.4 percent, still above the government’s target.

“The main source of the downward trend of the July 2021 inflation was the lower annual increment registered in the transport index at 7.0 percent, from 9.6 percent in the previous month,” Mapa said.

Contributing also to slower price increases were alcoholic beverages and tobacco at 10.2 percent; furnishing, household equipment and routine household maintenance at 2.3 percent; as well as restaurant and miscellaneous goods and services at 3.6 percent.

Excluding selected food and energy items, core inflation continued to move at a slower rate of 2.9 percent in July from 3.0 percent in June.

Meanwhile, inflation for food advanced to 5.1 percent from 4.9 percent in the previous month.

Prices in the National Capital Region (NCR) were steady at 3.2 percent, while inflation in areas outside Metro Manila eased to 4.3 percent in July, from 4.4 percent in June 2021.

Six regions in areas outside NCR exhibited lower inflation during the month.

But despite inflation dipping back within target in July, Nicholas T. Mapa, ING Bank Manila senior economist took note of the recent pickup in food costs and the acceleration of food items.

Given the hefty share of food items in the overall consumer price index, Mapa said inflation pressures have elevated in the second half of the year despite extremely soft domestic demand with the enhanced community quarantine and ongoing recession.

He estimated that a possible 3.0 percent to 5.0 percent increase in the cost of basic food items, such as canned goods and packaged noodles, on top of a possible pickup in fruits and vegetables due to storm damage will all likely translate to elevated food inflation.