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Inflation lowest in nearly 2 years, but NEDA warns of risks

After a slight uptick in May, the country’s headline inflation slowed down to 2.7% in June 2019.

This is the lowest since September 2017, according to the Philippine Statistics Authority.

Inflation was recorded at 3.2% in May 2019 and 5.2% in June 2018.

The Bangko Sentral ng Pilipinas, in a statement, said the resulting year-to-date average of 3.4% remains within the government’s inflation target range of 3% ± 1.0 percentage point for the year.

Core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—was also lower at 3.3 percent in June from 3.5 percent in May.

The PSA said the slowdown in June was due to slower price increases of selected food and non-food items.

Year-on-year inflation rate of most food commodities eased during the month supported by sufficient domestic food supply conditions, while both rice and corn prices also continued to decline in June 2019 relative to year-ago levels.

At the same time, non-food inflation decelerated as electricity rates declined resulting from lower generation charge while transport inflation also fell due to the reduction in prices of domestic petroleum products.

“The latest inflation outturn continues to support the BSP’s assessment of a manageable inflation outlook over the policy horizon, with average inflation expected to settle within the government’s target range of 3% ± 1.0 percentage point for 2019 and 2020,” the central bank said in a statement.

The National Economic and Development Authority (NEDA), however, said there is a need for caution against upside risks, including weather-related shocks and uncertainties in the global oil market.

“Slower inflation comes with optimism that the quality of life will improve along with the economy’s robust growth,” NEDA said.

But the agency noted that the country expects nine to 13 typhoons this year as well as above-normal amount of rainfall brought by the southwest monsoon or habagat.

The agency also noted that a weak El Niño is seen to persist until August 2019 and may continue until the first quarter of 2020.

“We reiterate our call to beef up production support and farm recovery programs in areas affected by El Niño,” the agency stated.

“We also pitch for an assessment on the vulnerability and sustainability of farm areas to ensure that farming activities are adaptive to the environment and resilient to weather disturbances. (Ventures Cebu)

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