RP June inflation eases to 3.9% from 4.3% in May

(Updated 4:52 p.m.) The Philippines' annual headline inflation rate eased to 3.9 percent in June from 4.3 percent in May, as slower annual price increases were posted in all the commodity groups except in food, beverages and tobacco index, the National Statistics Office said Tuesday. Inflation a year earlier was 1.5 percent. Excluding selected food and energy items, core inflation further improved to 3.7 percent in June from 3.8 percent in May, the Statistics Office said. “June inflation at 3.9 percent is just a tad above the lower end of our forecast range for the month and nearly half a percentage point lower than the level in May of only 4.3 percent," Amando M. Tetangco Jr., governor of the Bangko Sentral ng Pilipinas, said in a text message to reporters. This development, Tetangco said, “puts the full year inflation target for 2010 and 2011 fairly safe and provides the BSP flexibility when we review the stance of monetary policy next week." “With this development, the second quarter and first semester inflation rate reached 4.2 percent, well within the Development Budget Coordination Committee target of 3.5 to 5.5 percent," Augusto B. Santos, deputy director general of the National Economic Development Authority, said Tuesday in his memorandum for the President. Parts of the NEDA official's memorandum was released in a statement for the media. "Fuel and electricity prices declined in June compared to the previous month by 1.0 percent and 0.4 percent, respectively," NEDA said in the statement. “Data from the Department of Energy showed that retail prices of LPG in the market decreased by P0.94 per kilo, from P32.66 per kilo in May to P31.72 per kilo in June. On the other hand, electricity prices fell by an average of P0.0979 per kilowatt hour in June compared to May due to reduced transmission charges and system loss charges, according to Meralco," Santos explained. Also contributing to the slowdown in inflation for June were reductions in the price of transportation and communication (-0.9 percent), rice (-0.1 percent), and fish (-0.1 percent) over the previous month. Core inflation, or the rate of change in headline consumer price index after excluding selected food and energy items, slowed further to 3.7 percent from 3.8 percent the previous month, the Statistics Office said. The inflation rate in Metro Manila declined to 4.1 percent from 4.6 percent in May, while those outside Metro Manila remained lower for the fourth straight month at 3.8 percent from 4.2 percent. According to the National Statistical Coordination Board, headline inflation is the rate of change in the consumer price index or CPI, a measure of the average price of a standard basket of goods and services consumed by a typical family. The CPI is composed of various consumer items as determined by the nationwide Family Income and Expenditure Survey conducted every three years by the NSO. Specific items from the consumer price index that were excluded to measure core inflation were rice, corn, fruits and vegetables, liquefied petroleum gas, kerosene, as well as oil, gasoline and diesel, or the food and energy. The annual inflation rate in the National Capital Region, comprised of the 16 cities and a municipality of Metro Manila, eased to 4.1 percent from 4.6 percent in same comparable period, because of the slowdown in the services index, the Statistics Office said. In areas outside the capital region, the annual inflation slowed to 3.8 percent from 4.2 percent, as all commodity groups posted lower price increases except the food, beverage and tobacco index, it said. —VS/OMG, GMANews.TV