Inflation sizzles to 6.1% in June, highest in almost 4 years

Metro Manila (CNN Philippines, July 5) — Inflation hit its fastest rate in nearly four years in June at 6.1% with food and transport costs leading the increase in commodity prices, the Philippine Statistics Authority (PSA) said Tuesday.

The last time inflation hit this rate was in November 2018. According to National Statistician Dennis Mapa, it is the quickest since the 6.9% hit in September and October that year — which was marked with rice supply and local currency woes.

June's pace fell within the 5.7-6.5% range pegged by the Bangko Sentral ng Pilipinas for the month.

It brought average inflation for the first half of 2022 to 4.4%, still above the central bank’s 2-4% goalposts for 2022.

Food and non-alcoholic beverages accounted for more than half of June's inflation uptrend. Meat, mainly chicken; rice; and fruits and nuts pushed up the commodity group's prices.

The PSA said transport represented a third of the increase in basic goods last month, primarily driven by gasoline, road transport like jeepneys, and diesel.

Alcoholic beverages and tobacco held the remaining share to the acceleration in inflation in June. Cigarettes, beer, and spirits and liquor mainly lifted costs for this commodity group.

Inflation in the National Capital Region surged to 5.6% during the month from 4.7% in May.

In all areas outside NCR (AONCR), it jumped to 6.3% from 5.5% the month prior with all regions logging swifter rates.

The Cordillera Administrative Region and Central Luzon posted the highest at 7.5% and the Bangsamoro Autonomous Region in Muslim Mindanao still recorded the slowest at 3.1%.

The country's poorest families likewise saw inflation quicken at 5% in June, compared to 4.3% the month prior. This brought the year-to-date average for this income group to 3.7%.

Inflation for the bottom 30% income households still uses 2012 as base year, as the PSA is still in the process of rebasing to 2018 which other inflation rates already use.

Asian Institute of Management economist John Paolo Rivera described the higher inflation rate in June as “alarming,” as the consumers’ purchasing power had a striking difference from the previous months and last year.

“Everyone can actually feel the difference with the inflation this month, from last month, and from last year,” Rivera told CNN Philippines’ The Final Word.

The central bank has hiked interest rates by half a point since May to arrest rising inflation. Meanwhile, the Department of Budget and Management has released over ₱6 billion in cash aid for poor households bearing the brunt of more expensive prices.

Rivera said the government should continue giving targeted subsidies to the poor, as these will augment their daily spending, particularly in basic necessities such as food and medicine.

“We need to learn from (our experience during) the pandemic that there are certain facilities required for government to effectively distribute subsidies, such as technology and the national ID system,” the economist said.

The National Economic and Development Authority (NEDA), meanwhile, emphasized the need to ensure a stable supply of food, given it's role as the primary driver of inflation during the month.

"The government must immediately address logistical constraints to complement the government’s Plant, Plant, Plant 2 program. As the country’s inflation rate continues to increase, we must continue fast-tracking our policies to make sure that Filipinos can still travel to work and bring sufficient and healthy food to their tables," said NEDA chief Arsenio Balisacan.

The economic manager also promoted the adoption of alternative work arrangements to further conserve energy, which is also a key driver of inflation, and ensure the safety of all.