MANILA - Philippine inflation slowed to 4.1 percent in June— a 6-month low, and the lowest inflation rate so far for 2021.
This follows three straight months of inflation remaining steady at 4.5 percent.
This may be the beginning of a downtrend, but there are still many factors that could contribute to higher prices moving forward, said the National Statistician, Undersecretary Dennis Mapa.
“Meron tayong threats pa dito, ito ang mga tinitignan natin. One is transport. While there was a slight decrease compared to May, nakita nga natin 'yung level ng prices ay mataas pa rin. Also dahil pumapasok ang fuel sa mataas na weight, particular ang LPG, isa pa 'yon. Pag mag-spike sa petroleum products, may spillover effect sa transport, housing, water, at gas component," Mapa said.
(We have threats here, these are what we are monitoring. One is transport. While there is slight decrease compared to May, we saw that the level of prices is still elevated. Also, fuel comes in at the heavy weight, particularly LPG, that's one. When there's a spike in petroleum products, there's a spillover effect on transport, housing, water and gas components.)
Transport inflation has been a significant contributor to inflation due in large part to the impact of COVID-19 lockdowns on public transport.
Physical distancing has made it more expensive to travel, especially for large groups who were able to share the cost of travel prior to the pandemic.
Transport inflation has fallen sharply over the last few months, but again, as Mapa mentioned, this can be attributed to the high base effect, with transport fares already elevated this time last year.
Mapa also warned food inflation is still a concern.
“Nakikita namin 'yung fish group of items ay tumataas. Ilang buwan na ito na pataas. May mga fish products na negative ang inflation nya, Tilapia, at Bangus. Ang galunggong ang mataas," he said.
(We saw the fish group items rising. It has been rising for the past few months. There are fish products that have negative inflation, tilapia and bangus. Galunggong is elevated.)
Meat inflation, a problem since last year due to the impact of the African Swine Fever on pork supply, slowed in June compared to May, but Mapa said this is also something on their watchlist.
“It is good, sa NCR between P8 [and] P10 ang drop in prices of pork compared to May. Ito ay itra-track natin kung tutuloy ito dahil malaki ang component ng meat sa food basket," he said.
(It's good in NCR, between P8 [and] P10 drop in prices of pork compared to May. We can track this if this will continue since meat has a huge component in the food basket)
Mapa added that the increased importation of frozen pork was also a factor, although he stressed the decline in pork prices was seen in fresh pork meat.
“Nakita namin ang effect of importation, I’m not so sure kung dumating ang malaking bahaging ito. Nakita natin sa datos na bumaba ang inflation ng meat products, particularly ang pork, sa buong bansa at particular sa National Capital Region," Mapa said.
(We saw the effect of importation. I'm not so sure if there has been an arrival of a huge chunk. We saw in the data that there is slower inflation in meat products, particularly pork in the whole country, particularly in the National Capital Region.)
Meat inflation remains elevated, while fish inflation has been on an uptrend for months.
Meanwhile, rice inflation has fallen into negative territory and stayed there. Vegetable inflation accelerated in June but remained in negative territory as well. This means both rice and vegetable prices are lower compared to last year.
The June inflation rate may be the lowest for the Philippines this year, but it is still among the highest in the region, especially when compared to major ASEAN economies. Only Malaysia is experiencing inflation at the same level.
The June inflation rate was lower than the Philippine Central Bank’s forecast for June of 4.3 percent but within the Central Bank’s forecast range of between 3.9 and 4.7 percent.
“The latest inflation number is consistent with expectations that inflation could remain above target in the near term as meat and oil prices remain elevated," Central Bank Governor Benjamin Diokno said.
Meanwhile, the Bangko Sentral ng Pilipinas said average inflation "is projected to settle at the high end of the target range of 2 to 4 percent in 2021.
"However, price pressures are seen to abate leading to the reversion of average inflation near the midpoint of the target in 2022 to 2023," the BSP said.
"The effective implementation of direct non-monetary measures will be crucial in mitigating further supply-side pressures. The risks to the inflation outlook remain broadly balanced. The uptick in international commodity prices owing to supply chain bottlenecks and the recovery in global demand could lend upward pressures on inflation," it added.
Downside risks continue to emanate from new COVID-19 variants that could delay easing of lockdown measures and temper growth prospects, the central bank said.
Central Visayas had the lowest inflation rate in the Philippines in June, while the Bicol Region had the highest. The bottom 30 percent income households experienced an inflation rate of 4.3 percent, once again higher than the national average as poor families spend more on food and transport.