Inflation Accelerates to 4.4% in July, Highest Since October 2023

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MANILA, Philippines — Inflation in the Philippines surged to 4.4 percent in July, marking the highest rate recorded this year, up from 3.7 percent in June, primarily driven by rising utility and food costs, according to the Philippine Statistics Authority (PSA).


The July inflation rate, which reflects the increase in average prices of goods and services commonly purchased by consumers, is the fastest since the 4.9 percent recorded in October 2023, although it remains lower than the 4.7 percent seen in July of the previous year.


While this latest figure falls within the Bangko Sentral ng Pilipinas’ forecast range of 4 to 4.8 percent for the month, it exceeds the government’s annual target of 2 to 4 percent.


National Statistician Dennis Mapa noted in a press briefing that the overall inflation increase can be attributed to a notable rise in the housing, water, electricity, gas, and other fuels category, which grew to 2.3 percent in July from just 0.1 percent in June. Additionally, the food and non-alcoholic beverages sector saw an increase to 6.4 percent in July, up from 6.1 percent the previous month.


Food inflation itself rose to 6.7 percent in July, compared to 6.5 percent in June, largely due to a significant uptick in the prices of meat and other animal products, which increased to 4.8 percent from 3.1 percent. Prices for fruits and nuts also rose sharply, reaching 8.4 percent from 5.6 percent in the prior month.


Rice inflation, however, slowed to 20.9 percent in July, down from 22.5 percent in June. Mapa indicated that average rice prices fell slightly, with regular milled rice costing P50.90 per kilogram in July, down from P51.10 in June. Well-milled rice prices decreased to P55.85 per kilogram from P55.96, while special rice dropped to P64.42 from P64.56.




Mapa suggested that rice inflation could further ease and potentially drop below 20 percent in August, thanks to reduced tariffs on rice imports and last year’s high base figures. “There will definitely be adjustments in rice inflation, especially since August 2023 had a high base,” he explained.


Core inflation, which excludes volatile food and energy items, also saw a decline, falling to 2.9 percent in July from 3.1 percent the previous month.


Economist Sarah Tan from Moody’s Analytics indicated that July’s inflation rate is expected to be the peak, with a gradual decrease anticipated in the coming months, particularly in the food category, which constitutes a significant portion of the consumer price index. She noted that the effects of Super Typhoon Carina may impact inflation figures after the 60-day price freeze on basic goods, imposed on July 24, concludes.


The National Economic and Development Authority (NEDA) emphasized that the government is implementing vital measures to support vulnerable sectors and ensure food security. NEDA Secretary Arsenio Balisacan stated, “The government is committed to addressing the pressing issue of food security for every Filipino amid the rising prices in July and the expected challenges from typhoons and rains due to La Niña this August.”


Among the initiatives is a P510 million subsidy program from the Department of Agriculture aimed at assisting approximately 160,000 farmers facing increased fuel costs between August and September.


Finance Secretary Ralph Recto reassured that the recent inflation spike is temporary and will likely stabilize as the effects of the rice tariff cuts become more evident. He noted that the headline inflation increase is primarily a one-time adjustment due to high base effects, particularly concerning rice prices.


Despite the inflation rise, Recto expressed optimism that inflation rates would align with government targets for the remainder of the year as interventions take effect. He acknowledged that while vegetable prices might see slight increases due to damage from Typhoon Carina, the overall trend should improve.


Data revealed that local rice prices only saw gradual decreases in July as traders continued to sell off inventories purchased at higher prices prior to the implementation of Executive Order 62, which reduced rice tariffs from 35 percent to 15 percent to help control inflation.


Recto concluded that a more significant decline in rice retail prices is expected in the coming months as the volume of imports at lower tariffs increases, thereby enhancing local supply.


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