HEADLINE inflation likely slowed to 2.7 percent in July from 2.8 percent in June owing to stable food prices and lower electricity rates, the Department of Finance (DoF) said on Monday.
The estimate compares with 1.9 percent in July 2016, and the inflation target of between 2 percent and 4 percent for full-year 2017.
Analysts gave a forecast range of 2.7 percent to 3 percent for July on higher costs of fuel and electricity, and a weaker peso offset lower food prices.
Official inflation figures are set to be release by the Philippine Statistics Authority on August 4, Friday.
In his report to Finance Secretary Carlos Dominguez 3rd, Finance Undersecretary Gil Beltran said the increase in consumer prices likely moderated as index heavyweights food and non-alcoholic beverages remained steady last month.
Prices of food and non-alcoholic beverages clocked in at 3.5 percent last month, unchanged from June, but higher compared with 2.7 percent in July 2016.
Beltran, who is also the Finance department’s chief economist, explained that power costs also dropped last month.
“Inflation rate this month (July) is likely to moderate to 2.7 percent on the back of stable food prices. Year-on-year, power rates also declined,” Beltran said.
“Continuing benign inflation will enable the economy to sustain rapid growth and hurdle volatilities in the world economy with relative ease,” he added.
In July, the alcoholic beverages and tobacco indices may have risen by 6.7 percent from 6.2 percent in June, health to 2.5 percent from 2.3 percent, and transport to 2.8 percent from 2.3 percent, the DoF said.
Prices of housing, utilities and fuels likely decreased to 1.7 percent from 2.1 percent; furnishings and household equipment to 2.0 percent from 2.1 percent; communications to 0.1 percent from 0.2 percent; and recreation and culture to 0.9 percent from 1.0 percent.
The average price of diesel in Metro Manila increased to P30.13 per liter last month from P29.7 in the previous month, and from P27.55 in July last year, the finance department said.
Average price of gasoline in the first four weeks of July slightly dropped to P43.28 per liter from P43.6 in June, but higher compared with P39.88 a year earlier, it said.