(Updates with details, comment from the NEDA)
Philippine headline inflation hit its slowest pace in 20 years at 0.8 percent in July, dragged by lower food, energy and oil prices, the National Economic and Development Authority (NEDA) said on Wednesday.
The inflation figure for the month matched the consensus forecast of analysts from five institutions polled earlier by The Manila Times, namely the University of Asia and the Pacific (UA&P), Metrobank Research, Security Bank Corp, global bank HSBC and the United Kingdom-based investment bank Barclays.
The rate also stood within the central bank’s forecast range of between 0.5 percent and 1.3 percent for the month.
July 2015 now marks a record low for the monthly inflation series from 1995, with 2006 serving as the current base year, the NEDA said.
Official data from the Philippine Statistics Authority (PSA) showed growth in consumer prices at 0.8 percent decelerated from 1.2 percent in June and 4.9 percent in July last year.
Excluding food and energy prices, core inflation eased to 1.9 percent in July from 2 percent in June and from 3 percent a year earlier.
From January to July, core inflation averaged 2.3 percent. Including those prices, headline inflation for the year-to-date averaged 1.9 percent, falling below the 2 percent to 4 percent target range of the Bangko Sentral ng Pilipinas (BSP).
The PSA said negative annual rates were seen in the indices for housing, water, electricity, gas and other fuels and transport.
“The indices of food and non-alcoholic beverages; furnishing, household equipment and routine maintenance of the house; health; and education also slowed down,” it added.
Food, nonfood inflation ease
The NEDA said headline inflation in the food subgroup eased further in July to 1.3 percent from 2.1 percent in June, following moderate price pressures in bread and cereals, fish, vegetables, and fruits.
In part, the increase in total rice stocks inventory, recorded at 30.9 percent year-on-year as of June 2015, supported the normalization of rice prices from double-digit annual growths posted in 2014, Socioeconomic Planning Secretary Arsenio Balisacan said.
Balisacan added that stable bread prices also benefited from low global wheat prices, while meat prices remained stable.
Non-food inflation also reflected stable price movements in July this year following continued rollbacks in the prices of electricity, gas, and other fuels.
Balisacan, who is also the NEDA director general, said the easing of core inflation to 1.9 percent is favorable for household consumption and supports economic expansion moving forward as it provides less pressure for interest rates to increase.
On the other hand, inflation in Metro Manila accelerated to 0.8 percent in July from 0.6 percent the previous month due to slight increases in the prevailing prices of basic necessities and prime commodities.
In contrast, all regions, except the Davao Region (Region XI), registered slower year-on-year price increases, thus resulting in a moderated overall inflation of 0.8 percent in July 2015 for from 1.4 percent in June 2015 and 5.1 percent same period a year ago.
Amid low and stable inflation this year, Balisacan emphasized the need for the government to be wary of the upside risks to prices such as the occurrence of typhoons in the second semester, which could be intensified by a prolonged El Nino.
“Continued monitoring of agricultural areas is important to ensure that appropriate policy actions are implemented without delay,” Balisacan added.