MANILA - Philippine inflation eased anew with headline inflation falling to 4 percent in July, from 4.1 percent the month before.

The Philippine Statistics Authority attributes this to a deceleration in transportation inflation, particularly in tricycle fare and fuel, alongside a sharp drop in domestic airfare.

Transport inflation has eased considerably, after playing a major role in keeping inflation at an elevated rate of 4.5 percent in March, April, and May.

Food inflation however is starting to become a problem once again.

Vegetable prices have spiked, and fish prices have continued their uptrend. Meat inflation has decelerated but remains elevated due to persistently high pork prices

Philippine Statistics Authority

Philippine Statistics Authority

Philippine Statistics Authority

Inflation for the bottom 30 percent income households accelerated to 4.4 percent in July, bucking the downtrend of overall headline inflation, because of higher food prices.

National Statistician and PSA Undersecretary Dennis Mapa said faster food inflation hits the poor harder because they spend more on these items.

“Iba kasi 'yung weights natin ano sa bottom 30 percent compared sa average household. Ang mataas na weight dito sa bottom 30 percent ay yung fish, na sa 9.3 percent ang weight nya, at nakita natin na talagang tumaas ang presyo ng isda ngayong buwan. Yung pangalawa, mataas ang presyo ng vegetable, nasa 4.4 percent," Mapa said.

(We have different weights for the bottom 30 percent compared to the average household. One item with a heavy weight for the bottom 30 percent is fish, at 9.3 percent. We saw fish prices are really up this month. Second, the price of vegetables is high, and it (has a weight of) 4.4 percent.)

As for the reasons why fish and vegetable prices are rising, Mapa said “It is a combination of bad weather, nagkaroon ng lower supply, plus ang hike sa presyo ay dahil doon din sa contribution ng transportation, of course, due to higher prices of petroleum.”

(It is a combination of bad weather, which led to lower supply, and a hike in prices due to the contribution of transportation, of course, due to higher prices of petroleum.)

The Bangko Sentral ng Pilipinas said the coming enhanced community quarantine (ECQ) could slow overall inflation further.

"The emergence of new coronavirus variants and delays in easing lockdown measures are seen to pose downside risks to both demand and inflation," BSP Governor Benjamin Diokno said.

But Diokno noted there are other factors that will balance this out.

“The uptick in international commodity prices due to supply-chain bottlenecks and the recovery in global demand could lend upside pressures on inflation," he said.

Diokno: The balance of risks to the inflation outlook remains broadly balanced over the policy horizon. The uptick in international commodity prices due to supply-chain bottlenecks and the recovery in global demand could lend upside pressures on inflation.

— Warren de Guzman (@wddeguzman) August 5, 2021

Diokno: On the other hand, the emergence of new coronavirus variants and delays in easing lockdown measures are seen to pose downside risks to both demand and inflation.

— Warren de Guzman (@wddeguzman) August 5, 2021

Mapa however, said even if ECQ slows demand, food inflation could remain a problem moving forward.

“Ang ating inflation rate sa fish and seafood, nagsimula sya tumaas noong March. March is 4.9, and then, 6.0 in April, 7.8 noong May. 8.7 noong June. Ngayong buwan ang ating fish basket ay nasa 9.3 at malaki rin ang weight nitong fish basket doon sa ating inflation, sa CPI basket in general," Mapa said.

(Our inflation rate for fish and seafood started rising in March. In March it was at 4.9, and then 6.0 in April, 7.8 in May, and 8.7 in June. This month our fish basket was at 9.3, and the fish basket has a heavy weight in inflation or the CPI basket in general.)

Other factors are the rising prices of vegetables due to bad weather, transportation, and despite the slight decline in prices, meat remains substantial especially pork, he added.

"Ito kasi mataas ang kanilang weight doon sa ating basket. particular sa food basket. Ito yung nakikita natin na magiging contributor sa posibleng paggalaw, pagtaas ng inflation sa mga susunod na buwan," he said.

(These have a high weight in our basket, particular to the food basket. These are what we expect to be a contributor to the possible movements or increase in inflation in the following months.)

Food and non-alcoholic beverage inflation accelerated to 4.9 percent in July from 4.7 percent in June, and 2.4 percent in July 2020.

It took a 2.6 percentage point month-on-month deceleration in transport inflation, a 1 percentage point deceleration in alcohol and tobacco inflation, as well as slower inflation in furnishing and household equipment, recreation and culture, and restaurant and miscellaneous goods and services to offset that and pull the national headline number down by a tenth of one percent.

Philippine inflation remains one of the highest in the region, especially when compared to major ASEAN economies.