Inflation in July remains stable at 1.9 percent, the government said Friday, adding that it expects inflation to be "manageable" for the rest of the year.
"The steady inflation in July is due to slower increases in food prices, which were able to offset higher electricity charges, " said Socioeconomic Planning Secretary Ernesto Pernia in a statement.
He said core inflation, which excludes selected volatile food and energy prices, also remains stable at 1.9 percent in July. He said this is within the Central Bank of the Philippines forecast of 1.5-2.4 percent for July 2016, and median market expectation of 1.9 percent.
"The manageable inflation trend in the first seven months of 2016 is expected to continue for the rest of the year considering the expanding productive capacity of the domestic economy, persistently low oil prices, solid private household consumption and investment, buoyant business and consumer sentiment, and adequate credit and domestic liquidity," said Pernia, also the director general of the National Economic and Development Authority.
He added that headline inflation for January to July 2016 averaged at 1.4 percent, still below the low end of the government' s inflation target of 2 to 4 percent.
"We are thus expecting full-year inflation to emerge at around 1.98 percent," Pernia said.
The agency said Inflation in the non-food group stayed the same at 0.9 percent. "This was mainly driven by slight uptick in prices of housing, water, electricity, gas and other fuels, which were mitigated by slower inflation for other sub-commodities like education and health," it said.
But the agency said international oil prices increased from the previous quarter despite global oil prices remaining below 2015 levels. "This can be attributed to the prospects of a pickup in global oil consumption, slowdown in crude oil production, and increase in oil supply outages," it said.
Meanwhile, it said food inflation slowed to 2.8 percent in July from 3 percent in the previous month. "This was due to a slowdown in inflation among commodity sub-items like meat and vegetables. Prices of milk, cheese, and eggs remained constant, while prices of fish, breads and cereals experienced upward pressures, but not enough to pull down the average price for the overall food group," it said.
The agency said that rice inflation slightly increased to 0.4 percent in July from 0.2 percent in the previous month, which may be attributed to declining harvests as July marks the start of the lean months for rice.
Pernia stressed the need for the government "to stay vigilant and prepare for the upcoming La Nina through ensuring the completion of flood control projects, and improving agriculture logistics." "In order to reduce potential source of upside prices pressures, we also need to ensure that prices of utilities such as electricity and water are stable," Pernia said, adding that existing petitions for upward adjustment in power prices should be reviewed thoroughly.
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