​Inflation slows to 4.1%

PHILIPPINES - In Brief 06 Jul 2021 by Romeo Bernardo
The headline inflation rate continued to slow down in June, posting a 4.1% yoy increase vs 4.5% in the previous month. On a mom basis, a slight uptick to 0.2% was observed, mainly due to higher prices of energy-related items. The latter followed rising world oil demand that has pushed up crude oil prices to $70/bbl, a 45% increase ytd. This, coupled with a weaker peso, has led to weekly domestic fuel pump price increases last month[1], totaling to a 4% increase vs May. Also contributing to the uptick in inflation was higher electricity rates reflecting the Luzon power shortage.[2] There were offsets from lower meat prices in line with Executive Order 134 liberalizing importation of pork products. June’s inflation outturn supports our 4.1% average inflation forecast for the year.CHART 1.Contribution to mom inflationSource: PSACHART 2.Contribution to yoy inflationSource: PSA[1] https://businessmirror.com.ph/2021/07/05/fuel-prices-rise-for-five-weeks-in-a-row-except-for-kerosene/[2] See GS post “Takeaways from congressional hearings on recent power outages,” 19 June 2021

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