Inflation surges to 1.9% in June

Inflation kicked up to a 14-month high of 1.9 percent in June from 1.6 percent in May on the back of higher food prices, tuition and electricity rates, the Philippine Statistics Authority (PSA) reported yesterday.

Last month’s inflation was the highest since averaging 2.2 percent in April last year.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said last month’s inflation fell within the 1.5 to 2.4 percent forecast set by monetary authorities.

“Inflation in June at 1.9 percent was higher than the May figure, due mainly to greater annual increases in food and nonalcoholic beverages. Other non-food items also rose,” Tetangco said.

The BSP has set an inflation target of two to four percent between 2016 and 2018.

“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 below or around the low end of the national government target range,” Tetangco said.

During the last rate-setting meeting of the central bank, monetary authorities lowered the inflation forecast to two percent instead of 2.1 percent this year but retained the 3.1 percent projection for 2017 and 2.6 percent for 2018.

The benign inflation environment as well as robust domestic demand allowed monetary authorities to keep interest rates steady for 14 consecutive ratesetting meetings since October 2014.

“Therefore we see no need to change the stance of monetary policy for now,” Tetangco said.

Tetangco said monetary authorities would continue to monitor external factors such as the normalization of interest rates in the US as well as the decision of the United Kingdom to leave the European Union.

“We will continue to monitor developments, particularly the policy actions of advanced economies including the Fed, in light of Brexit. The market will also continue to monitor how the economic team will implement the government’s policy agenda,” he said.

The PSA traced the increase in inflation to the higher annual increment in the heavily weighted food and non-alcoholic beverages index as well higher annual growth in the indices of beverage and tobacco; clothing and footwear; furnishing, household equipment and routine maintenance of the house; health; recreation and culture; as well as restaurant and miscellaneous goods and services.

Inflation in the National Capital Region (NCR) inched up to 1.1 percent in June from one percent in May while that of areas outside NCR jumped to 2.1 percent from 1.7 percent.

PSA said the opening of classes last month saw a monthon-month 0.4 percent increase in the prices of consumer items at the country level.

“This was primarily brought about by the upward adjustments in the prices of food items particularly vegetables, fish, rice and meat. Tuition hikes in most of the regions and higher charges in electricity rates also contributed to the uptrend. Increments in the prices of kerosene, LPG and selected construction materials were also noted in many provinces during the month,” PSA said.