The inflation rate in the Philippines dropped to 4.7 percent in July, the lowest it has been in 15 months. This is a significant decline from the 4.9 percent recorded in April 2022, according to the Philippine Statistics Authority.
In a press briefing, National Statistician Dennis Mapa attributed the continued slowdown of inflation to slower price increases in various sectors including electricity, home rentals, liquefied petroleum gas, meat, fish and seafood, sugar, confectionery, desserts, road transport, and airfares.
July marks the sixth consecutive month of declining inflation, indicating a positive trend in the prices of goods and services commonly consumed by households.
The actual inflation rate of 4.7 percent in July is lower than the median estimate of private-sector analysts, which was 4.9 percent. However, it remains higher than the target average set by the Bangko Sentral ng Pilipinas (BSP) of 2 percent to 4 percent for the full year.
In a statement, Finance Secretary Benjamin Diokno expressed optimism, stating that the country is “over the hump,” but acknowledged the need to continue monitoring factors that may hinder sufficient production of goods, particularly food items.
BSP Governor Eli Remolona Jr. mentioned in an interview that the central bank is not yet prepared to lower its benchmark policy rate of 6.25 percent due to ongoing supply-side factors that pose risks to inflation expectations. Remolona highlighted the possibility of El Niño affecting food production in both the Philippines and countries that supply food imports.
The BSP anticipates inflation to gradually ease back to the target range by the fourth quarter of the year, provided there are no further supply shocks.
Despite the positive trend in inflation, households and businesses should remain cautious about enduring high-interest rates until supply-side factors are effectively addressed.
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