Manufacturing input costs continued to drop year-on-year for the third-straight month, even as the producer price index (PPI) recorded a slower decline of 0.27 percent in July 2025, the Philippine Statistics Authority (PSA) reported on Friday, Aug. 29.

Preliminary PSA data showed that the year-on-year PPI drop last month was outpaced by the 0.35-percent decline in June, while matching the also 0.27-percent drop in May.

In July 2024, PPI fell by 0.33 percent year-on-year.

But month-on-month, input costs in July rose 0.1 percent from June levels, a faster pace than the previous month’s 0.07 percent and 0.02 percent a year ago.

PPI posted an average year-on-year growth of 0.3 percent in the first seven months of 2025.

The PSA reported that the more moderate drop in the annual growth rate of PPI for the manufacturing sector in July was mainly due to the slower decline in the manufacture of computer, electronic, and optical products, which eased to one percent from 2.5 percent in June.

PSA data showed that these manufacturing sectors accounted for 84.1 percent of the slower drop in the annual growth rate of PPI for manufacturing in July.

“Among the 22 industry divisions for manufacturing, manufacture of computer, electronic, and optical products has the second-highest weight in the computation of PPI,” the PSA said.

The PSA also emphasized that the slower PPI decline in July was also driven by faster growth in food (0.5 percent from 0.4 percent in June) and furniture (1.4 percent from 0.7 percent) manufacturing.

Along with the manufacture of computer, electronic, and optical products, the PSA also reported that the manufacture of other non-metallic mineral products and transport equipment contributed to the PPI growth rate.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort told Manila Bulletin that the three consecutive months of year-on-year PPI decline “partly reflects global oil and other commodity prices, among the lowest in about four years, which reduced input costs for importers and other domestic manufacturers.”

Ricafort also noted that the weaker United States (US) dollar-to-peso exchange rate, hovering near a 10-month low, contributed to lower import costs and manufacturers’ prices.

“This is consistent and also reflects the positive effects of the benign headline inflation in recent months, amid lower [prices of] rice and other agricultural products in recent months after relatively better weather conditions since the El Niño drought ended more than a year ago,” Ricafort said, citing that improved rainfall increased agricultural output and production, which, in turn, also increased local supplies and reduced their prices.

Headline inflation fell to an almost six-year low of 0.9 percent year-on-year in July, bringing the year-to-date average rate to 1.7 percent, below the government’s two- to four-percent target range of annual consumer price increases deemed manageable and conducive to economic growth.

(Ricardo M. Austria)