Philippines: Inflation picks up in June
July 5, 2011
In June, consumer prices added 0.40% over the previous month, following the flat reading registered in May. The result mainly reflected a 0.80% month-on-month price increase in the services category, followed by a 0.12% increase in food prices, the largest component of the CPI. As a result, annual headline inflation inched up from 4.5% in May to 4.6% in June. The reading represented the fastest pace since April 2009 and came in a notch below market expectations of inflation, accelerating to 4.7%. The annual core inflation rate, which excludes the price volatility associated with items such as oil and food, jumped from 3.7% in May to 4.0% in June. Annual average inflation, which is the reference rate used by the Central Bank to conduct monetary policy remained stable at 3.8% in June, which is unchanged over the last seven months. Currently, annual average inflation is below the target rate of 4.0% (1% tolerance margin) set by the Bank for 2011. As inflation remains contained, the Central Bank left the benchmark interest rate unchanged at 4.50% at its latest meeting held on 16 June. On 28 June, the National Statistics Office (NSO) introduced the new CPI series rebased to year 2006, which will replace the current 2000-based CPI series next month. The NSO explained that the new price index better reflects changes in Filipino consumption patterns as well as recent economic developments. According to the new index, annual headline inflation rose 5.2% in June.