Inflation breached upper target in July - economists

Headline inflation likely accelerated to above four percent in July, breaching the government's two to four percent target for 2024 for the first time in seven months, due to higher prices of some key food items and elevated electricity costs, a poll of leading economists showed.

- KEISHA TA-ASAN

John Paolo Rivera, president and chief economist at Oikonomia Advisory & Research Inc., said inflation may have picked up to four percent in July after slowing to a four-month low of 3.7 percent in June.

The last time headline inflation was above four percent was in November 2023 at 4.1 percent.

Rivera attributed the upward inflationary pressure last month to supply disruptions from recent weather calamities, leading to higher prices of agricultural products.

Aris Dacanay, economist for ASEAN at HSBC, expects inflation to rise to 4.2 percent in July, well within the four to 4.8 percent forecast range of the Bangko Sentral ng Pilipinas (BSP) for last month.

“Typhoon Carina likely caused some uptick in food prices, with the floods taking a toll not just on the supply of food, but also in logistical costs,” he said.

He added that retail rice prices have not been lowered just yet despite the cut in tariff rates. This is because retailers are still unloading their inventories of rice that were previously bought at higher prices.

“Headline inflation may have also jumped month-on-month due to the steep increase in Metro Manila’s electricity rates after being deliberately kept low in June,” Dacanay added.