INFLATION likely decelerated further to 2.3 percent in July from 2.7 percent the month before on the back of lower food and oil prices, according to an economist.
In a report over the weekend, Security Bank Corp. chief economist Robert Dan Roces said “[d]omestic prices of basic goods and services are expected to have felt the benefits of a strong peso throughout the month, which made imported raw materials cheaper to buy.”
Prices of food and non-alcoholic beverages were also lower last month, he added, noting that the “restrictions and resulting supply pressures in pork imports from African swine flu (ASF) high-risk countries might not have affected the index as much when these were offset by lower prices in other major foodstuffs, notably rice.”
Electricity prices also went down in July as the Manila Electric Co. slashed rates by P0.107 per kilowatt hour in July — a downward adjustment from May’s P0.57/kWh — on the back of lower transmission charges for residential consumers.
“Moreover, pump prices of gasoline went down with falling global prices due to fears of weakening demand and supply surplus,” Roces said, adding that the “price of Brent [was] already at [the] $63-per-barrel level from June’s $66.55 per barrel.”
The report comes after the Philippine Statistics Authority (PSA) said early this month that consumer price growth in June eased from 3.2 percent in May, and was the lowest posted since August 2017’s 2.6 percent.
Earlier, members of the interagency Development Budget Budget Coordination Committee slashed this year’s inflation forecast to between 2.7 percent and 3.5 percent from between 3.0 and 4.0 percent.
Budget department officer-in-charge Janet Abuel said the lower projection was due to the government’s decisive steps to stabilize the general price level.
“These include the full implementation of presidential directives issued last year to increase the food supply and the passage of the Rice Liberalization Act, which opened up the rice sector and helped bring rice prices down,” she added, referring to Republic Act 11203, which President Rodrigo Duterte signed on February 14.
Inflation assumption for 2020 and 2022 remained at between 2.0 and 4.0 percent.
The PSA will release official inflation data for July on August 6.