1. Headline Inflation
The Philippines’ headline inflation or overall inflation slowed down further to 4.7 percent in July 2023 from 5.4 percent in June 2023. This is the sixth consecutive month of deceleration in the headline inflation and the lowest since March 2022 with an inflation rate of 4.0 percent. The average inflation rate from January to July 2023 stood at 6.8 percent. In July 2022, the inflation rate was recorded at 6.4 percent.
1.1 Main Drivers to the Downward Trend of the Headline Inflation
The continued downtrend of overall inflation in July 2023 was primarily brought about by the slower year-on-year increase in housing, water, electricity, gas and other fuels at 4.5 percent during the month from 5.6 percent in June 2023. The slower annual increment observed in the heavily-weighted food and non-alcoholic beverages at 6.3 percent in July 2023 from 6.7 percent in the previous month also contributed to the downward trend of headline inflation. The third main source of deceleration was transport, recording a faster annual decrease of -4.7 percent during the month from -3.1 percent in June 2023.
Compared with their previous month’s inflation rates, slower annual increments were noted in the indices of the following commodity groups during the month: a. Alcoholic beverages and tobacco, 10.9 percent from 11.6 percent; b. Clothing and footwear, 4.8 percent from 5.1 percent; c. Furnishings, household equipment, 5.8 percent from 6.0 percent; d. Recreation, sport and culture, 4.7 percent from 4.8 percent; e. Restaurants and accommodation services, 7.9 percent from 8.2 percent; and f. Personal care, miscellaneous goods and services, 5.6 percent from 5.8 percent.
On the contrary, the index of education services exhibited a faster year-on-year increase at 3.7 percent during the month from 3.6 percent in June 2023.
Meanwhile, the indices of the rest of the commodity groups retained their respective previous month’s annual growth rates.
1.2 Main Contributors to the Headline Inflation
The top three commodity groups contributing to the July 2023 headline inflation were the following: a. Food and non-alcoholic beverages with 50.0 percent share or 2.4 percentage points; b. Housing, water, electricity, gas and other fuels with 20.2 percent share or 1.0 percentage point; and c. Restaurants and accommodation services with 16.0 percent share or 0.8 percentage point. 2. Food Inflation
Food inflation at the national level continued to decelerate for the sixth consecutive month at 6.3 percent in July 2023. In the previous month, food inflation was recorded at 6.7 percent, while it was 7.1 percent in July 2022.
2.1 Main Drivers to the Downward Trend of Food Inflation
The deceleration of food inflation in July 2023 was primarily influenced by the annual decrease in meat and other parts of slaughtered land animals at -1.7 percent during the month from 0.3 percent in the previous month. This was followed by fish and other seafood with an inflation of 4.5 percent in July 2023 from 6.2 percent in June 2023. Also contributing to the downtrend of food inflation in July 2023 was the slower year-on-year growth of sugar, confectionery and desserts at 21.4 percent during the month from 28.9 percent in the previous month.
Lower inflation rates during the month were also noted in the indices of the following food items: a. Flour, bread and other bakery products, cereals, 10.1 percent from 11.0 percent; b. Milk, other dairy products and eggs, 9.7 percent from 11.2 percent; c. Oils and fats, 2.0 percent from 5.6 percent; d. Fruits and nuts, 8.4 percent from 11.4 percent; and e. Food products not elsewhere classified, 7.8 percent from 8.5 percent.
Meanwhile, compared with their previous month’s inflation rates, higher year-on-year growth rates were observed in the indices of rice at 4.2 percent from 3.6 percent; corn at 5.8 percent from 5.3 percent; and vegetables, tubers, plantains, cooking bananas and pulses at 21.8 percent from 12.7 percent.
2.2 Main Contributors to the Food Inflation
Food inflation shared 45.8 percent or 2.2 percentage points to the overall inflation in July 2023. The food groups with the highest contribution to food inflation during the month were the following:
a. Cereals and cereal products, which includes rice, corn, flour, bread and other bakery products, with 32.4 percent share or 2.0 percentage points;
b. Vegetables, tubers, plantains, cooking bananas and pulses, with 27.1 percent share or 1.7 percentage points; and
c. Milk, other dairy products and eggs, with 12.5 percent share or 0.8 percentage point.
Source: PSA