MANILA – Price increases in the transport sector resulted in slightly higher inflation in July 2017, the National Economic and Development Authority (NEDA) said.
Based on a report of NEDA-attached agency Philippine Statistics Authority (PSA), headline inflation increased to 2.8 percent in July 2017 from the revised 2.7 percent the previous month.
“However, this is still lower than market expectations of 3.0 percent, and well within government’s target of 2 to 4 percent. Meanwhile, core inflation, which excludes select volatile food and energy prices, logged its lowest monthly record for the year of 2.1 percent in July 2017 from 2.6 percent in June,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
Higher prices in the transport sector pushed non-food inflation to 2.4 percent from 1.9 percent in June.
Pernia explained that the increase in transport price inflation can be traced to the rise in railway transport prices, reflecting the fare hike in July 2017. This was the first fare adjustment in 20 years for the Philippine National Railways.
Moreover, higher domestic petrol prices, particularly unleaded gasoline, diesel, kerosene, and liquefied petroleum gas, also contributed to faster price increases in the transport sector.
Meanwhile, inflation for the food subgroup slowed to 3.3 percent in July 2017, the lowest since January. This is due to slower price adjustments for oils and fats, meat, fruit, sugar, honey, vegetables, and rice.
“As the Philippines enters its lean months for rice production, it is important for the government to ensure adequate supply of rice to prevent inflationary pressures. Along this line, the planned government-to-private sector rice importation scheme is a step in the right direction. Congress should also act fast to amend domestic laws to end the quantitative restrictions on rice,” Secretary Pernia said.
However, he warned that, despite slower rice inflation, dwindling rice stocks could exert upward pressures on food price inflation in the near term.
“The significantly lower probability of El Niño or La Niña happening this year bodes well for agricultural production and domestic commodity prices. But the government needs to continue investing in agri-infrastructure like catchment basins, advance atmospheric moisture extraction, and water-saving technologies,” Pernia said.