MANILA – Sufficient supply of food and moderate price pressures in energy and oil rates tamed inflation to its new lowest level in two decades, according to the National Economic and Development Authority (NEDA).

The Philippine Statistics Authority reported today that headline inflation rate plunged further to 1.2 percent in June 2015 from 1.6 percent in the previous month and 4.4 percent in June 2014.

“The June 2015 inflation rate is now the lowest, covering the monthly inflation series from 1995 to June 2015 using the current base year 2006. The figure was also below the market expectation of 1.5 percent and very well within the inflation target range of 2.0 to 4.0 percent set by the government for 2015,” said NEDA Officer in Charge (OIC) and Deputy Director-General Emmanuel F. Esguerra.

Headline inflation in the food subgroup eased in June 2015, (2.1% from 3.2%) following slower price adjustments in rice, meat, vegetables, and fruits.

“Aside from the steady and sufficient supply of food, inflation benefitted from reduced electricity prices due to lower fuel costs. The double-digit year-on-year decline in the prices of unleaded gasoline, diesel, kerosene, liquefied petroleum gas or LPG, and the decline in Meralco rates affected key oil and electricity-related commodities and services in the current month,” the NEDA official said.
On the other hand, non-food commodities reflected slight price increments as inflation partially increased to 0.4 percent in June 2015 from 0.3 percent in May 2015.

Meanwhile, core inflation, which excludes selected volatile food and energy prices, declined to 2.0 percent from 2.2 percent in May 2015 and 2.8 percent in June 2014. It averaged at 2.3 percent in the first six months of 2015.

“The slackening of the core inflation provides less pressure for interest rates to increase, and this bodes well for household consumption and further supports economic expansion moving forward,” said Esguerra.

The slowdown of inflation appears to be geographically broad-based as the price index in the National Capital Region dipped to 0.6 percent in June 2015 from 0.7 percent in May 2015 and 3.6 percent in the same period a year ago. Likewise, all regions except the Cordillera Administrative Region registered slower year-on-year price increases, thus, resulting in a tempered overall inflation of 1.4 percent in June 2015 from 1.8 percent in May 2015 and 4.7 percent same period a year ago.

“It is also worth noting that except for the Philippines, inflation in the ASEAN-5, which includes Indonesia, Malaysia, Singapore, and Thailand, generally posted upward adjustments in May and June 2015,” said Esguerra.

But he added that the government will remain cautious against any upside inflation risk, such as that arising from the occurrence of typhoons in the second half, which could be intensified by the prolonged El Niño.

“Efforts to monitor drought incidence in agricultural areas should be sustained to ensure that suitable policy actions are realized without delay. Timely importation of rice to augment domestic supply should serve as a ready measure to prevent the repeat of the high rice prices witnessed in the third quarter of 2013 until 2014 as these occurrences adversely affect the well-being of the citizenry,” Esguerra explained.

Esguerra is OIC of NEDA while Economic Planning Secretary Arsenio M. Balisacan is on official business abroad from July 3-12, 2015.