Inflation at 2.8% in June on higher fuel prices, weaker peso

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The country’s inflation rose to 2.8 percent in June, mainly driven by higher petroleum prices and the peso’s depreciation.

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The National Statistics Office said the inflation rate was higher than the 2.6 percent in May. Inflation a year ago was also pegged at 2.8 percent.
The June figure was well within the 2-percent to 2.9-percent
projection of the Bangko Sentral ng Pilipinas (BSP).
BSP Governor Amando Tetanco Jr. said the central bank will continue to
closely watch external developments.
“We will monitor the impact of these factors on global and domestic
investor sentiment and growth dynamics to see if there is any need to
adjust our own policy settings,” Tetangco said.
The National Economic and Development Authority (NEDA) said that stable food prices on the back of abundant supply helped moderate the increase in inflation.
The NEDA said that inflation rate for food and non-alcoholic beverages
remained at 2.4 percent in June. This was because of slower
changes in the price of corn, meat, milk, cheese and eggs, fruits,
sugar, jam, honey and confectionery, and oils and fats.
For the first six months of 2013, NEDA noted that inflation was still below government target.
“The average inflation rate for the first half of 2013 settled at 2.9
percent. This is slightly below the low-end of the Development Budget
Coordination Committee’s inflation target of 3.0 to 5.0 percent for
2013,” said Socioeconomic Planning Secretary Arsenio Balisacan.
Balisacan, who is also NEDA director general, attributed the higher
inflation rate to the significant price adjustments in electricity, gas and other fuels, and transportation-related commodities and services.
“This is consistent with the higher international price of Dubai
crude during the period. The increase was driven by uncertainties in
the international market due to social unrest in Syria,” said
Balisacan.
He added that the peso depreciated by 3.9 percent in June compared to the previous month as investors pulled back their investments in emerging economies and shifted to United States instruments.
“This was in reaction to the announcement made by US Federal Reserve
Chairman Ben Bernanke that the US’ stimulus policies could possibly
wind down later this year due to an improving US economy.  However,
the peso started to gain strength in the latter part of June 2013
following the slower-than-expected growth of the US economy,” said
Balisacan.
He said that apart from stable food prices, the lower price of electricity also tempered the increase in oil prices in June.
Balisacan noted that the generation charge of the Manila Electric Co. (Meralco) registered an annual decline of 7.8 percent, to P5.66 per kilowatt hour, last June.
“The decrease in generation charges during the period is still
attributed to the newly approved rates by the Energy Regulatory
Commission under the new Power Supply Agreement of Meralco, which
enables the electric company to purchase power from suppliers with
lower costs,” he explained.
Core inflation eased to 2.9 percent in June 2013, according to the NSO. The rate was slower than the 3.0 percent rate in May and 3.7 percent rate in June 2012.
Core inflation represents a more long-term inflation trend, since it excludes certain items that have short-term and volatile price
movements.

MAYVELIN CARABALLO

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