The inflation rate rose to a 14-month high of 1.9 percent in June following higher prices in food and non-food items, data from Philippine Statistics Authority show Tuesday.
The June inflation was higher than 1.2 percent recorded in the same month last year and 1.6 percent in May this year. It was also the highest since 2.2 percent in April 2015.
“The hike in inflation can be attributed to the residual effects of the weakening El Niño and the slight recovery of oil prices,” said Economic Planning Secretary Ernesto Pernia.
“But the inflation trend in the first six months of 2016 was manageable. This is expected to continue for the rest of the year against a backdrop of expanding productive capacity of the domestic economy and persistently low oil prices,” Pernia added.
The June inflation was within the Bangko Sentral ng Pilipinas’ forecast of 1.5 percent to 2.4 percent for June 2016 and the median market expectation of 1.9 percent.
Bangko Sentral Governor Amando Tetangco Jr., meanwhile, said the current monetary policy stance remained appropriate at the moment despite the 3-basis-point increase in inflation in June.
“… This turnout is consistent with our assessment that over the policy horizon, monthly inflation will move to within target, although for 2016 we still see full-year average to be just… around the low end of the national government target range,” Tetangco said in a text message.
“Therefore, we see no need to change the stance of monetary policy for now,” he said. Tetangco predicted last week June inflation likely settled within the 1.5-percent to 2.4-percent range, as upside pressures could come from the increase in tuition as well as in rice and vegetable prices.
The National Economic and Development Authority said the rising prices in housing, water, electricity, gas, and other fuels drove inflation in the non-food group to 0.9 percent. Inflation in June also adjusted to the rise of oil prices for 2016.
“International oil prices have yet to recover, but as global demand improves alongside the pressures brought by the Canada wild fires and the political unrest in Nigeria, the biggest oil exporter in Africa, oil prices have reached its highest level in 2016,” Pernia said.
Food inflation climbe to 3 percent in June.
The lingering effects of the El Niño caused the uptick in prices of vegetables and livestock, among other food commodities.
Rice registered a year-on-year deflation of -0.5 percent in June but prices picked up slightly by 0.2 percent from the previous month as El Nino-related droughts continued to negatively affect production.
Pernia said government should start preparing for the upcoming La Niña while farmers recover from the impact of the El Nino phenomenon.