Higher transport costs post-lockdown push June inflation to 2.5%

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Metro Manila (CNN Philippines, July 7) – Limited public transportation options coupled with recovering fuel prices drove inflation faster in June, alongside some increases in select food items.

The Philippine Statistics Authority said Tuesday that June inflation was at 2.5 percent, coming from a 2.1 percent pickup in May and lower than the 2.7 percent reading a year ago.

The figure compares to the 1.9-2.7 percent forecast range given by the Bangko Sentral ng Pilipinas last week and breaks four straight months of softer price movements.

Inflation tracks the price movements of basic goods like food and fuel.

National Statistician Dennis Mapa said transport costs rose by 2.3 percent in June, coming from a decline in May, as Metro Manila and most parts of the country saw relaxed quarantine rules. With limited options for commuting, tricycle fares surged by 26 percent while bicycle prices also rose by 7.5 percent during the month.

June marked the shift of Metro Manila and most parts of the country to the more relaxed general community quarantine after months under lockdown meant to fend off further coronavirus infections. For Metro Manila alone, tricycle fares rose by nearly 44 percent from May.

Bicycles became a viable option for workers who needed to return to their jobs as public transportation remains limited. Meanwhile, Mapa said limiting tricycles to just one passenger at a time amid social distancing protocols likely pushed drivers to raise fares.

READ: Worth the ride? How bikes are becoming a transport option under the new normal

Meanwhile, fuel prices remained lower compared to a year ago, but at a softer rate versus the previous month.

In Metro Manila, there was an 8.6 percent increase in transport prices. This is more pronounced when compared to a national average rise of 2.3 percent. The government allowed traditional jeepneys, buses, and UV Express units to return to the roads only in late June.

Inflation was softer in the capital region at 2 percent, versus a 2.7 percent climb in the provinces. However, the impact of higher prices was more pronounced for the country's poorest families. Inflation for the bottom 30 percent income group was higher at 3 percent, the highest in nearly a year.

By location, the Bicol region experienced the fastest price pickups at 4.3 percent, while adjustments were the softest in Eastern Visayas at 1.1 percent.

For food, the prices of rice and sugar remained lower year-on-year, but the price of corn, meat, oils and fats saw faster price increases. Mapa added that fish products, especially dilis (anchovies) and galungggong (round scad), contributed to rising food prices alongside beef, chicken, mango and banana. Meanwhile, milk, cheese and egg products saw steady costs, for an overall food inflation rate of 2.7 percent.

​So-called "sin" products such as alcoholic drinks and tobacco also recorded an 18.5 percent spike in prices, with cigarettes leading the pack with a 22.7 percent price increase. There was also a slight pickup in the costs for housing, utilities, and other fuels versus the previous month.

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On average, prices of widely-used goods in the first six months rose by 2.5 percent, which is comfortably within the 1.75-3.75 percent target band. BSP Governor Benjamin Diokno said inflation will remain "benign" for the remainder of the year as economies reel from the COVID-19 pandemic.