UTILITIES DRAG PRICE HIKE: PHL inflation eases to 3.7% in June 2024

By Francis Allan L. Angelo

The Philippines’ headline inflation eased to 3.7% in June 2024, a slight decrease from 3.9% in May, according to the Philippine Statistics Authority (PSA).

The shift brings the national average inflation from January to June 2024 to 3.5%, down from 5.4% in June 2023.

The downtrend was driven primarily by slower annual increases in housing, water, electricity, gas, and other fuels, which saw a minimal increase of 0.1% in June from 0.9% in May.

Transport costs also slowed, with a 3.1% increase in June compared to 3.5% in May, and restaurant and accommodation services saw a slight decrease to 5.1% from 5.3%.

Additionally, lower annual increments were noted in various commodity groups, including alcoholic beverages and tobacco (3.8% from 4.2%), clothing and footwear (3.2% from 3.4%), furnishings, household equipment and routine maintenance (2.8% from 3.1%), and personal care and miscellaneous goods and services (3.2% from 3.4%).

Conversely, the index for food and non-alcoholic beverages exhibited a higher annual increase of 6.1% in June from 5.8% in May.

Main Contributors to Inflation

The top three commodity groups contributing to the June 2024 inflation were food and non-alcoholic beverages (61.9% share), restaurants and accommodation services (13.2% share), and transport (7.5% share).

Food inflation at the national level rose to 6.5% in June from 6.1% in May, driven by a significant increase in vegetables, tubers, plantains, cooking bananas, and pulses, which jumped to 7.2% from 2.7%. Meat prices also rose, with an inflation rate of 3.1% in June from 1.6% in May.

Regional Inflation Trends

In the National Capital Region (NCR), inflation decelerated to 2.3% in June from 3.1% in May, influenced by a decrease in housing, water, electricity, gas, and other fuels, which saw a year-on-year decrease of 1.7%. The regions outside NCR (AONCR) recorded a steady inflation rate of 4.1% in June, unchanged from May. Nine regions in AONCR exhibited higher inflation rates, with Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) registering the highest inflation at 5.3% for the fifth consecutive month.

Government Response

The National Economic and Development Authority (NEDA) emphasized the government’s commitment to maintaining inflation within the target range of 3 to 4 percent.

“The easing in our inflation rate in June, mainly due to lower electricity rates, highlights the importance of strengthening our energy sector to sustain our gains,” NEDA Secretary Arsenio Balisacan said.

The Development Budget Coordination Committee (DBCC) also reaffirmed its goal to achieve price stability and return to the average inflation target range of 2.0 to 4.0 percent between 2025 and 2028 through proactive monetary policies and targeted government interventions.

These include the Comprehensive Tariff Program for 2024-2028 and the Food Stamp Program to mitigate the impact of elevated food prices on vulnerable sectors.

In support of farmers and fisherfolk affected by El Niño, the Department of Social Welfare and Development (DSWD) distributed PhP1.37 billion in cash assistance, with each recipient receiving PhP10,000 under the Ayuda sa Kapos ang Kita Program (AKAP).