The country’s annual headline inflation went up to 2.8 percent in June, mainly driven by higher petroleum prices following the increase in the price of oil in world markets and the peso depreciation during the period, according to the National Statistics Office (NSO).
This was higher than the 2.6 percent recorded in May. Inflation a year ago was also pegged at 2.8 percent.
Inflation for June was also well within the 2-percent to 2.9-percent projection of the Bangko Sentral ng Pilipinas (BSP).
“Inflation for June at 2.8 percent is in line with BSP’s forecast, and further supports our assessment of manageable inflation and the appropriateness of our current policy stance,” BSP Governor Amando Tetanco Jr. said.
He also assured the public that the central bank will continue to monitor external developments, particularly any changes in the monetary policies of and assessments in the demand conditions by advanced economy in their jurisdictions.
“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 added.
However, for its part, the National Economic and Development Authority (NEDA) said that stable food prices on the back of abundant supply partially moderated the increase in inflation.
The NEDA said that the inflation rate for food and nonalcoholic beverages remained at 2.4 percent in June 2013. 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, the agency noted that inflation rate was still below the government’s 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 [percent]to 5 percent for 2013,” said Socioeconomic Planning Secretary Arsenio Balisacan.
Balisacan, who is also NEDA director general, said that the June 2013 inflation was prompted by 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,” Balisacan said.
He added that the peso depreciated by 3.9 percent in June 2013 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,” Balisacan said.
The NEDA official said that besides stable food prices, the lower price of electricity also tempered the gains in oil prices in June.
Citing industry data, 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 in June 2013.
“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.
Meanwhile, core inflation further eased to 2.9 percent in June 2013, according to the NSO.
This was slower relative to the 3-percent rate in May 2013 and 3.7 percent rate in June 2012.
Core inflation represents a more long-term inflation trend, as it excludes certain items that have short-term and volatile price movements.