The country’s headline inflation or overall inflation increased to 4.4% in July or higher than the 3.7% in June, primarily influenced by the higher year-on-year increase in the index of housing, water, electricity, gas and other fuels at 2.3% during the month from 0.1% in June 2024.

The Bangko Sentral ng Pilipinas (BSP) earlier forecast that inflation rate in July 2024 will settle between 4% and 4.8%. The latest inflation figure, however, breaches the 2% to 4% target of the government for this year.

“Higher electricity rates along with the increased prices for agricultural commodities like vegetables, meat, and fruits along with higher domestic oil prices are the primary sources of upward price pressures for the month,” the BSP said in a statement last week.

According to the Philippine Statistics Authority (PSA), the latest inflation figure brings the national average inflation from January to July 2024 to 3.7%. The agency also noted that the July 2023, inflation rate was higher at 4.7%.

“The faster annual growth rate of the heavily-weighted food and non-alcoholic beverages index at 6.4% in July 2024 from 6.1%in June 2024 also contributed to the uptrend of the overall inflation,” the PSA said.

“Moreover, higher inflation rates during the month were also noted in the indices of transport at 3.6% and education services at 5.8 %from their respective inflation rates of 3.1% and 3.8% in the previous month,” it added.

In contrast, the PSA said the following commodity groups registered lower inflation rates during the month:

a. Alcoholic beverages and tobacco, 3.4% from 3.8%;
b. Clothing and footwear, 3.1% from 3.2%;
c. Health, 2.8% from 2.9%;
d. Recreation, sport and culture, 3.4% from 3.5%; and
e. Restaurants and accommodation services, 4.9% from 5.1%.

Meanwhile, food inflation at the national level rose to 6.7% in July 2024 from 6.5% percent. Also, rice inflation remained elevated at 20.9%, which, however, was lower than the 22.5% of June.

With the higher inflation rate, the Monetary Board of the BSP may likely hold key policy rates in its next meeting on August 15.

The BSP earlier said that it was open to lowering key policy rates in August or the third quarter of this year.

(Photo by Ben Briones from PNA)