Inflation slows to 2.7% in June

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The increase in the prices of widely used goods eased in June, the Philippine Statistics Authority (PSA) reported this morning.

Preliminary data from the PSA showed headline inflation at 2.7% last month, down from 3.2% in May and 5.2% in June 2018. It was also the slowest since the 2.6% logged in August 2017.

The June result fell within the Bangko Sentral ng Pilipinas’ (BSP) 2.2%-3.0% forecast for the month and was lower than the 2.9% median estimate in BusinessWorld’s poll of 12 economists conducted late last week.

Year to date, inflation averaged 3.4%, past the midpoint of the BSP’s 2-4% target range though still above the 2.9% full-year forecast average.

Core inflation – which excludes volatile food and energy items in the consumer basket – was 3.3% last month, slower than May’s 3.5% and 4.3% in the same period last year.

“The slowdown of inflation in June 2019 was mainly driven by slower annual rate posted in the index of the heavily-weighted food and non-alcoholic beverages at 2.7% [from 3.4% in May],” the PSA said in a statement.

The food-alone index likewise eased to 2.6% versus the previous month’s 3.2% and 5.8% a year ago.

Slower annual increments were also observed in alcoholic beverages and tobacco (9.3% from May’s 9.5%); housing, water, electricity, gas and other fuels (3% from 3.3%); furnishing, household equipment and routine maintenance of the house (3.1% from 3.2%); transport (1.6% from 3.5%); and communication (0.3% from 0.4%).

Contributing further to the slowdown, the PSA noted, was the faster decline observed in the education index at 4.5% from May’s 3.8% contraction.

On the other hand, health (3.7% from 3.6%) and recreation and culture (3.2% from 3.1%) recorded faster rates. The indices of clothing and footwear (2.4%) and restaurants and miscellaneous goods and services (3.3%) remained unchanged. — Christine Joyce S. Castañeda