Inflation slowdown to continue – DoF
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Sun, 11 Aug 2019 16:15:51 +0000
Inflation rate will continue to decelerate in the coming months to hit the lower end of the government’s assumption for the full year average, a senior Department of Finance (DoF) official said.
In an interview late last week, Finance Undersecretary Gil Beltran said the DoF is hoping for lower August inflation following the lower 2.4 percent print in July.
Beltran stressed that the sustained deceleration in inflation rate would result in a lower full-year 2019 average, which he stressed would be “more on the lower end” of the interagency Development Budget Coordination Committee’s 2.7-3.5 percent assumption.
“It depends upon oil prices because inflation is also affected by petroleum products, but food items will continue to go down because it has happened for the last five or six months,” he added.
According to the recently released Second Quarter Inflation Report of the Bangko Sentral ng Pilipinas (BSP), estimated futures prices of Dubai crude oil as of end-June 2019, which are based on movements of Brent crude oil, showed a lower path for 2019 to 2023, compared with estimates in the previous quarter.
Citing the June 2019 US Energy Information Administration report, the central bank said world oil supply was expected to reach 100.85 million barrels per day (mb/d) this year, slightly lower than the projected world oil demand of 101.14 mb/d.
The BSP also reported that sufficient domestic food supply conditions continued to support easing food prices in the second quarter of 2019.
Food inflation rate slowed down significantly to 3.0 percent year-on-year in April-June after exceeding the upper end of the target of 4.0 percent for five consecutive quarters.
The BSP added that rice prices decreased with the summer harvest season and continued arrival of rice imports.
Also, corn prices fell during the quarter relative to year-ago levels. Slower price increases of other large-weighted food items such as meat, fish, as well as milk, cheese, and eggs also contributed to the slowdown in food inflation.