Inflation edges up to 1.4%

Inflation was slightly higher in June following a deceleration in the past four months, the Philippine Statistics Authority (PSA) reported on Friday, driven by increased utility costs.

Consumer price growth rose to 1.4 percent from May’s 1.3 percent, within the Bangko Sentral ng Pilipinas’ (BSP) 1.1- to 1.9-percent estimate but lower than the 1.5-percent median in a Manila Times poll of economists

Inflation a year earlier was markedly higher at 3.7 percent.

Core inflation, which strips out volatile food and energy prices, was unchanged at 2.2 percent in June from May.

Year to date, headline inflation remained below the BSP’s 2.0- to 4.0-percent target at 1.8 percent, while core inflation hit 2.3 percent.

The PSA said that June’s increase was primarily driven by higher inflation for housing, water, electricity, gas and other fuels, which rose to 3.2 percent from 2.3 percent in May.

A slower year-on-year decrease in the transport index — 1.6 percent from 2.4 percent — also contributed, it added.

The Department of Economy, Planning and Development (DepDev), meanwhile, said government efforts had helped ease food inflation — one of the primary drivers of consumer price growth last year — to 0.1 percent in June from 0.7 percent and 6.5 percent a month and a year earlier.

Rice inflation was a steeper -14.3 percent, in particular, down from -12.8 percent in May.

“The sharp decline in food inflation over the past year underscores the continued progress in our coordinated efforts to boost local production, improve logistics, and implement calibrated trade and biosecurity measures,” DepDev Secretary Arsenio Balisacan said in a statement.

He said the government would continue implementing initiatives to ensure that supplies of commodities remain stable and shield consumers from price pressures.

The Department of Agriculture, in particular, will intensify programs aimed at boosting the hog population, which has been devastated by an African swine fever outbreak.

An onion research center will also be established to focus on developing methods to combat diseases and pests and boost yields, the DepDev said.

The Department of Energy, meanwhile, has partnered with oil companies to provide fuel discounts to drivers of public utility vehicles (PUVs), non-PUVs, and transportation network vehicles as fuel prices have become volatile due to geopolitical tensions.

Nine oil companies were said to have committed to the initiative as of June 30.

“While the continued easing of food inflation is encouraging, we will maintain our vigilance against possible external and domestic risks,” Balisacan said.

“We will remain focused on strengthening interagency coordination in implementing timely, targeted, and evidence-based interventions to safeguard the purchasing power of Filipino households, ensuring that the much-needed support reaches the most vulnerable sectors of the country.”

The latest inflation result will likely allow the BSP to continue lowering key interest rates, currently at 5.25 percent following a 25-basis point cut last month.

The next policy meeting will be in Aug. 28 and the central bank will have the added benefit of July inflation data due to be released by the PSA on Aug. 5.

BSP Governor Eli Remolona Jr. said that two more rate cuts were possibly this year given low inflation and slow economic growth.

During last month’s rate-setting meeting, the BSP’s policymaking Monetary Board slashed its 2025 inflation forecast to 1.6 percent from 2.4 percent.

Those for 2026 and 2027, meanwhile, were slightly raised to 3.4 percent and 3.3 percent, respectively, from 3.3 percent and 3.2 percent.

Source: Manila Times

Gross savings climb by 16.7% in 2024

The country’s total gross savings in 2024 climbed by 16.7% from a year earlier, the Philippine Statistics Authority reported.

At current prices, gross national savings, the difference between gross national disposable income and the combined household and government spending, totaled P7.70 trillion, up from the P6.60 trillion in 2023.

This accounts for 26% of gross national income in 2024, higher than the 24% recorded a year earlier.

Overall economic output grew last year, with the gross domestic product (GDP) showing a revised growth rate at 5.7% and gross national income (GNI) at 7.7% in real terms, respectively.

At current prices, GDP and GNI also expanded by 8.8% and 10.8% in 2024, respectively.

During the period, household spending rose year on year by 8.2% to P20.14 trillion. Government spending likewise saw an increase of 11% to P3.84 trillion.

In 2024, the Philippines’ gross national disposable income rose by 10.5% to P31.68 trillion from P28.66 trillion in the previous year. The figure was obtained by subtracting the GNI from the net difference between current transfers to and from the rest of the world.

GNI per capita at current prices stood at P264,804. This was higher than P241,065 in 2023 and P210,228 in 2022.

Broken down by institutions, nonfinancial corporations accounted for more than half of the gross savings last year with P4.96 trillion, followed by financial corporations (25.7% share with P1.98 trillion), households including nonprofit institutions serving households (NPISHs) (5.1% share with P393.31 billion), and general government saving (4.7% share with P364.98 billion).

Oikonomia Advisories and Research, Inc. Economist, Reinielle Matt M. Erece said that the uptick in saving last year was primarily driven by higher interest rates which led households and businesses to “reduce spending and hold their money in banks to take advantage of the interest rate.”

Before the Bangko Sentral ng Pilipinas (BSP) began its easing cycle in August of last year, benchmark interest rates remained steady at 6.5%.

Since then, the BSP has trimmed key rates for three straight meetings last year but paused at its February meeting. The central bank slashed policy rates by 25 basis points each in April and June meetings bringing down the key rate to 5.25%.

“Inflation rate is low and continues a downward trend. This creates an expectation among households to postpone current consumption and save more since prices in the future are expected to further decline,” Tereso S. Tullao, Jr., director at De La Salle University-Angelo King Institute for Economic and Business Studies, said.

Mr. Tullao added that better economic performance and low unemployment rates may also be attributable to higher saving as it moves in line with income.

The country’s unemployment rate dropped to 3.8% in 2024, the lowest figure since the 7.8% in 2005.

“It is possible that households increased their consumption marginally, but they may be putting their remittances in financial instruments, thus increasing their savings,” Mr. Tullao said.

He said that a stable economy driven by low inflation and unemployment rates are the key to sustained national savings.

Mr. Erece said that the trend in increased spending may be continued if price levels are managed and more investments to bolster income growth are made.

For this year, Mr. Erece said that growth in savings may not match the level seen in 2024.

“Rate cuts may encourage more loans to be taken and reduce money that is kept in financial institutions as savings,” he said.

The Consolidated Accounts present a summary of transactions and relationships among the various flows of the economy, while the Income and Outlay Accounts are compiled for the four institutional sectors, namely, financial and nonfinancial corporations, general government, and households including nonprofit institutions serving households.

Source: Business World

Bulk price growth of building materials in NCR eases in May, retail price growth steadies

Wholesale price growth of construction materials in Metro Manila eased further in May, its slowest in three months, while retail price growth steadied, the Philippine Statistics Authority (PSA) reported.

Based on preliminary data, the PSA showed that year-on-year growth of the construction materials wholesale price index (CMWPI) in the National capital region (NCR) cooled to 0.2% in May from 0.3% in April.

The May reading was significantly lower than the 0.6% growth posted in May 2024.

It was also the lowest year-on-year growth in three months, when February posted no annual growth.

Year to date, May CMWPI growth averaged 0.2%, significantly lower than the 0.9% growth a year earlier.

“The downtrend in the annual growth rate of the CMWPI was mainly caused by the slower annual increase of the concrete products index at 0.3% in May from 0.5% in the previous month,” the PSA said in the report.

Concrete products accounted for 45.7% of the index.

Slower growth was also recorded in tileworks: (2% in May from 3.6% in April), and electrical works (0.3% from 0.4%).

Meanwhile, the following commodities logged faster annual declines: fuels and lubricants (-4.7% form -4%), reinforcing steel (-0.9% from 0.6%), and cement (-1.5% from -1.4%).

On the other hand, stronger growth was recorded in the index of hardware (0.4% from 0.1%), doors, jambs, and steel casement (0.5% from 0.4%)., and PVC pipes (0.6% from 0%).

In a separate report by the PSA, the construction materials retail price index (CMRPI) steadied to 1% in May, from April and from a year earlier.

The May CMRPI outcome was the lowest in 14 months or since the 0.6% in March 2024.

In the five months to May, CMRPI in NCR averaged 1.1% from 1% in January-May 2024.

The CMRPI is based on 2012 constant prices, while the CMWPI is based on 2018 constant prices.

The PSA attributed the steady growth to slower annual increases in the following commodity groups: carpentry materials (0.1% in May from 0.4% in April), painting materials and related compounds (2.1% from 2.4%), plumbing materials (0.5% from 1.5%), and tinsmithry materials (1.3% from 1.5%).

Meanwhile, among the seven commodity groups in the CMRPI, masonry materials (1.1% from 0.6%) and miscellaneous construction materials (0.4% from 0.3%) posted faster annual growth.

Nicholas Antonio T. Mapa, senior economist at Metropolitan Bank & Trust Co., said that he expects modest growth increases in building material prices, which reflects robust but subdued demand for construction activity.

“A further reduction in borrowing costs could help spur a rise in demand for construction projects and activity in the coming months,” he said.

In its April policy meeting, the central bank slashed borrowing costs by 25 basis points (bps), resuming its easing cycle. So far, the central bank has reduced key rates by a total of 100 bps since it began its easing cycle in August 2024.

Source: Manila Times