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THE cost
of goods and services in the country generally moved
down a bit in June and allowed inflation to average
lower to 2.3 percent from 2.4 percent in May, the
government reported on Thursday.
The
National Statistics Office (NSO) report pleased Bangko
Sentral ng Pilipinas Governor Amando M. Tetangco Jr.,
who expected inflation to range from 2.2 percent up to
2.9 percent during the month.
Tuition-fee increases at the resumption of the school
calendar plus world oil-price hikes were earlier feared
to ramp up inflation in June, and on Thursday, central
bank officials had an explanation for why the worst did
not happen.
“The
impact of higher world oil prices and ample liquidity
were tempered by the positive effects of the strong peso
and generally favorable food supply conditions,”
Tetangco said, following the release of latest data on
prices by the NSO.
The
2.3-percent inflation in June brings the year-to-date
inflation rate to 2.6 percent, “still below the
Development Budget Coordination Committee target of 4.0
to 5.0 percent,” according to the National Economic and
Development Authority (Neda).
“The
decline in core inflation rate to 2.5 percent also
suggested benign demand pressures on consumer prices
during the period,” said Neda officer-in-charge Rolando
G. Tungpalan in a memorandum sent to President Arroyo
following NSO report on inflation.
Tetangco,
meanwhile, relayed his comment in a mobile phone message
to financial reporters.
More
peso liquidity growth than there should be, or M3 as
economists refer to the term, remained well above 20
percent as of latest and should normally put pressure on
prices.
There
was no compelling pressure during the month, however, as
the local unit held its own against the US dollar,
having averaged higher than its May average of P46.81
per dollar to P46.16 per dollar in June.
The peso
further strengthened to P46.007 per dollar as of July 4.
In
addition to the strong peso, there generally was ample
food supply during the month that allowed prices to stay
relatively unchanged, Tetangco added.
“The
lower inflation rate in June casts a benign outlook,
being in the lower range of the BSP forecast.
We will
consider this, together with our initial assessment of
the impact of the liquidity management measures
implemented in May, in our policy meeting next week,” he
said.
The
seven-man monetary board which Tetangco chairs as BSP
governor is expected to keep its 33-month old policy
rate structure unchanged.
“Indicators continue to point to benign inflation
readings for the rest of the year. While demand has
increased moderately, the continued ample supply of food
and the strong peso are seen to temper price pressures
in the near term,” he reiterated.
However,
there are risks that could alter the path of inflation
going forward: these include the volatility in oil
prices, the likelihood of another wage hike and the fact
that domestic liquidity continues to average in the 20s
range rather than the 13-percent growth the BSP said
they were more comfortable dealing with.
“Year-on-year headline inflation rate at the national
level slowed down to 2.3 percent in June from 2.4
percent in May. Two commodity groups recorded lower
inflation rates compared to their May rates,” the report
from the NSO read.
On a
month-on-month basis, prices rose to 0.6 percent in June
from 0.3 percent in May, according to the NSO report.
The NSO
noted that inflation for food and beverages (FBT); and
miscellaneous items retained their previous month’s
rates at 2.6 percent and 1.6 percent, respectively.
In
terms of food prices, higher rates were observed in the
price movements of rice at 1.6 percent in June from 1.5
percent in May; corn at 4.3 percent from 3.7 percent;
dairy products at 4.3 percent from 3.8 percent; eggs at
6.9 percent from 6.3 percent; and fruits and vegetables
at 3.1 percent from 2.9 percent.
Also,
clothing; and power, fuel and water rates moved at
slower rates of 2.4 percent and 3.8 percent in June
compared with their respective rates of 2.5 percent and
4.0 percent in May.
Meanwhile, the movement in consumer prices for housing
and repair and services also went up. Housing and repair
went up by 1.5 percent and 2.0 percent, respectively.
The increase in the price of services went up by 2
percent, NSO said, owing to the opening of the school
year.
The NSO
noted that tuition hikes were observed in all regions
including the National Capital Region. Adjustments in
the prices of diesel, gasoline, engine oil, medicines
and selected school supplies were also noted during the
month, contributing to increments in the services index.
By
region, a slower inflation rate was registered in NCR at
1.9 percent in June from 2.1 percent in May.
Meanwhile, inflation rate in areas outside Metro Manila
moved up by 2.6 percent from its May rate of 2.5
percent. Six regions posted higher inflation rates. The
biggest increase of 0.8 percentage point was noted in
Central Visayas. |
