NEDA: June Food Prices Stable Despite Higher Petroleum Prices

PHILIPPINES - The National Economic and Development Authority (NEDA) said that prices of food commodities were stable in June 2013 despite higher petroleum prices for the said month.
calendar icon 8 July 2013
clock icon 3 minute read

This statement came after the National Statistics Office (NSO) reported that headline inflation last month was recorded at 2.8 per cent.

"The inflation rate in June 2013 was mainly driven by higher petroleum prices following the increase in the price of oil in world markets and the peso depreciation during the period. However, stable food prices on the back of abundant supply partially moderated the increase in inflation," said Socioeconomic Planning Secretary Arsenio M. Balisacan.

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

Mr Balisacan noted that inflation rate for food and non-alcoholic beverages remained at 2.4 per cent in June 2013. This was due to slower changes in the price of corn (3.8 per cent in June 2013 vs. 5.7 per cent in May 2013), meat (2.2 per cent vs. 2.4 per cent), milk, cheese and eggs (1.7 per cent vs. 2.1 per cent), fruits (4.6 per cent vs. 5.2 per cent), sugar, jam, honey and confectionery (0.1 per cent vs. 0.7 per cent), and oils and fats (-7.8 per cent vs. -7.5 per cent).

For the first six months of 2013, inflation rate was still below the government’s target.

"The average inflation rate for the first half of 2013 settled at 2.9 per cent. This is slightly below the low-end of the Development Budget Coordination Committee (DBCC)’s inflation target of 3.0 to 5.0 per cent for 2013," said Mr Balisacan, who is also NEDA Director-General.

The Cabinet official said that the June 2013 inflation was prompted by the significant price adjustments in electricity, gas and other fuels (0.4 per cent) and transportation related commodities and services (0.7 per cent). In May 2013, these commodity groups previously had price contractions (-0.4 per cent and -0.5 per cent, respectively), he said.

"This is consistent with the higher international price of Dubai crude during the period. The increase was driven by uncertainties in the international market due to social unrest in Syria," said Mr Balisacan.

He added that the peso depreciated by 3.9 per cent in June 2013 compared to the previous month, as investors pulled back their investments in emerging economies and shifted to United States (US) instruments.

"This was in reaction to the announcement made by US Federal Reserve Chairman Ben Bernanke that the US’ stimulus policies could possibly wind down later this year due to an improving US economy. However, the peso started to gain strength in the latter part of June 2013 following the slower-than-expected growth of the US economy," said Mr Balisacan.

The NEDA official said that apart from stable food prices, the lower price of electricity also tempered the gains in oil prices in June.

Citing industry data, Mr Balisacan noted that the generation charge of the Manila Electric Company (Meralco) registered an annual decline of 7.8 per cent to PhP5.66 per kilowatt hour in June 2013.

"The decrease in generation charges during the period is still attributed to the newly approved rates by the Energy Regulatory Commission (ERC) under the new Power Supply Agreement (PSA) of Meralco, which enables the electric company to purchase power from suppliers with lower costs," he explained.

Meanwhile, core inflation further eased to 2.9 per cent in June 2013, according to the NSO. This was slower relative to the 3.0 per cent rate in May 2013 and 3.7 per cent rate in June 2012.

Core inflation represents a more long-term inflation trend, as it excludes certain items that have short-term and volatile price movements.

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