July inflation soars to 6.4%

Published August 5, 2022, 10:16 AM

by Chino S. Leyco

Growth in consumer prices soared further in July to 6.4 percent from 6.1 percent in June, bringing year to date inflation to 4.7 percent, as supply limitations in the domestic market squeezed food costs, the Philippine Statistics Authority (PSA) reported Friday, Aug. 5.

Headline inflation, which measures the rate of increase in consumer prices, in July settled at the top end of the Bangko Sentral ng Pilipinas’ forecast range of 5.6 percent to 6.4 percent and well above the government’s target band of 2.0 percent to 4.0 percent. The July inflation was also significantly higher than the 3.7 percent registered in the same month last year.

Based on the PSA data, expensive food continued to be the main driver of the surge in inflation during the month. Other contributors were transport and utilities.

Food and non-alcoholic beverages increased 6.9 percent from 6.0 percent in the previous month, while transport jumped 18.1 percent from 17.1 percent in June. Lastly, housing, water, electricity, gas and other fuels rose 5.7 percent

Food, transport and utilities accounted for 68.2 percent of the overall inflation basket.

National Statistician Dennis M. Mapa said high inflation last month was driven by higher prices of food and non-alcoholic beverages, which accounted for 64 percent of the overall inflation in the country.

Mapa also said that because of inflation, Filipinos’ purchasing power had weakened in the past three-years, noting that the worth of P1 in 2018 was only P0.86 in July.

The National Economic and Development Authority (NEDA) said faster food inflation was caused by higher meat, fish, rice, corn, and fruit prices.

Earlier, the Philippine Chamber of Agriculture and Food Inc. has called on President Marcos to consider declaring a state of calamity for food sufficiency to avert a possible food crisis.

Socioeconomic Planning Secretary Arsenio M. Balisacan, however, assured that the government has measures to address the accelerating food prices, such as boosting local food production.

To increase farm output, Balisacan said the government would provide lower input costs, introduce new farming technologies, as well as extend financial assistance to farmers, and strengthen the agricultural value chain.

“These can be achieved through the Plant, Plant, Plant Program 2, the government’s P24-billion flagship program on food security, which provides subsidy and support to the agriculture sector,” Balisacan said in a statement.

More than 158,000 eligible farmers and fisherfolk are set to receive P3,000 each as fuel discounts to help cushion the impact of higher fuel prices.

As of July 20, accounts created for beneficiaries reached 109,073 nationwide. Out of the total accounts, 65,837 were loaded with fuel discounts amounting to P207.4 million.

For transport, NEDA said the accelerated inflation was mainly due to the nationwide provisional increase in public utility jeepney (PUJ) fares amid the skyrocketing oil prices.

Given that oil prices remain elevated, Balisacan said the government will fast-track the distribution of the second tranche of subsidies for PUJ drivers and operators.

The government will also accelerate the fuel cash subsidies for tricycle drivers together with the ongoing Libreng Sakay Programs as well as the approved MRT-3, LRT-2, and PNR Libreng Sakay for Students.

Meanwhile, Nicholas Antonio T. Mapa, ING Bank N.V. Manila senior economist said recent wage hikes and transport fare adjustments continue to feed through to the rest of the inflation basket.

“Bread manufacturers and retail outlets have announced price increases in the past month, indicating that inflation has hit more than just energy and imported food items,” Mapa said in a research note.

“The emergence of these second round effects suggests that price pressures are more pervasive,” he added.

In the first seven-months, inflation stood at 4.7 percent, within the government’s ceiling of 4.5 percent to 5.5 percent for the year.