Inflation rate eased to 4.1 percent in June from 4.5 percent in the past three months, as policy interventions to stabilize commodity prices started to take effect, the National Economic and Development Authority said Tuesday.
Data from the Philippine Statistics Authority showed that headline inflation rate slowed down from a steady 4.5 percent from March to May. This was also the lowest inflation rate recorded since December 2020. The year-to-date inflation remains at 4.4 percent.
“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,” Economic Planning Secretary Karl Kendrick Chua said.
Food inflation remained at 4.9 percent in June, with the faster inflation in fish tempered by slower inflation in other food items including rice, vegetables and meat. Meat inflation decelerated to 19.2 percent in June from a high of 22.1 percent in April and May. Month-on-month meat inflation also continued to decline at -0.3 percent from -0.1 percent.
“The declining meat inflation points to the positive effects of Executive Orders133 and 134. These are expected to further bring down meat prices during the second half of the year,” Chua said.
President Rodrigo Duterte declared a one-year state of calamity on May 10, 2021 amid the spike in pork prices resulting from the African Swine Fever outbreak that significantly reduced domestic pork production. This allowed LGUs to access their calamity funds and realign resources to help the hog industry.
Duterte also issued EO 135 to temporarily reduce the most favored nation tariff rates on imported rice to 35 percent from 40 to 50 percent. This allowed the country to diversify its market sources, expand rice supply, and further bring down rice prices.
“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,” Chua said.
Transport inflation also continued its downtrend at 9.6 percent in June from 16.5 percent in May 2021. However, the costs of transport services remain elevated primarily because of social distancing measures and the recovery of global oil prices. This is expected to partially decrease in the near term with the government’s accelerated vaccination program.
“Keeping transport expenses low complements our efforts to safely bring people to their workplaces. We are accelerating the vaccination of the A4 priority group of workers to keep them and their families protected as they earn a living. These efforts will help the economy recover strongly in 2021,” Chua said.
The Bangko Sentral ng Pilipinas said the June inflation was within its forecast range of 3.9 percent to 4.7 percent.
“The latest inflation number is consistent with expectations that inflation could remain above target in the near term as meat and oil prices remain elevated,” the BSP said.
“A major contributor to the slower pace in inflation was the lower annual rate of increase in the transport index at 9.6 percent, down from 16.5 percent in May 2021,” it said.
The BSP said the average inflation is projected to settle at the high-end of the target range of 2 percent 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,” it said.