GOVT ON TRACK WITH INFLATION TARGETS

MANILA—The National Economic and Development Authority (NEDA) said that cheaper prices of selected food and non-food commodities were observed in July 2013 compared to a year ago, indicating that the government is meeting its target of 3.0- to 5.0-percent inflation rate this year.

This statement came after the National Statistics Office (NSO) reported that headline inflation rate in July 2013 eased to 2.5 percent compared to the previous year.

Socioeconomic Planning Secretary Arsenio M. Balisacan noted that last month’s inflation rate was the lowest in the last 46 months, or almost four years.

“For the first seven months of 2013, headline inflation rate averaged only at 2.9 percent, and this is still below our target as set by the NEDA Board’s Development Budget Coordination Committee (DBCC),” he said.

Inflation rate is the percent increase in the prices of goods and services commonly purchased by households, as measured by the Consumer Price Index (CPI).

Balisacan, who is also NEDA Director-General, said that last month’s inflation was mainly driven by the generally lower inflation rate of food products, particularly in the National Capital Region.

“According to the Bureau of Agricultural Statistics, there were sharp reductions in the prices of vegetables in Metro Manila.  These include ampalaya, sitao, cabbage, carrots, baguio beans, and white potatoes, while tomatoes posted slower price increases in July 2013 compared to the previous month,” said Balisacan.

According to the BAS, the average price of ampalaya was cheaper by 10.5 percent, sitao by 2.7 percent, cabbage by 31.5 percent, carrots 21.4 percent, baguio beans by 23.6 percent, and white potato by 10.4 percent.  On the other hand, inflation rate for tomato slowed down to 15.1 percent in July 2013 from 21.7 percent in June 2013.

“Maintaining stable food prices complements our government’s strategy of significantly reducing hunger and poverty, so we can attain a more inclusive development,” said Balisacan.

The Cabinet official said that even non-food items registered slower price movements last month, particularly under the commodity group of electricity, gas and other fuels whose average prices were cheaper last month compared to a year ago.

“The negative 1.8-percent inflation rate in the said commodity group reflects the significant reduction in the generation charge of the Manila Electric Company (Meralco) in July 2013 following the lower costs from suppliers,” said Balisacan.

Balisacan explained that the company’s generation charge in July 2013 was cheaper by PhP0.33 per kilowatt hour (kWh), or by 17.5 percent, and that this contraction was faster than the 7.8 percent registered in June 2013.  He also said the transmission charge also slightly decreased by PhP0.04 per kWh.

“The NSO reported that core inflation slowed down to 2.3 percent in July 2013 from the revised 2.8 percent in the previous month and 4.1 percent in July 2012.  This brings the average core inflation from January to July 2013 to only 3.1 percent, which is also slower than the 3.7 percent in the same period last year.  All of these indicate weaker inflationary pressures for 2013,” he said. Core inflation represents a long-term inflation trend, as it excludes certain items that are associated with short-term and volatile price movements.

MR No. 2013-068

August 06 2013