After the slight uptick in May, last month’s inflation continued to soften at 2.7%, the slowest since September 2017. Inflation for the first half of the year is now recorded at 3.4%, firmly within the government’s target of 2.0% - 4.0% for 2019.

The slower annual growth in price levels are attributed mainly to food groups such as rice, corn, meat, fish, vegetables, etc. This was primarily driven by the government’s policies addressing supply-side issues last 2018, i.e the rice tariffication law among others. In addition, the continuing decline in global oil prices, lowering domestic fuel and transport prices, contributed to the slower-than-expected June inflation level.

UnionBank’s Economic Research Unit (ERU) expects 2019 inflation to continue to slow to a year average of 3.0%, slower from the previous ERU forecast of 3.2% for 2019. This expectation is from the assumption that global oil prices will continue to decline due to a potential global economic slowdown outweighing the impact of geopoliticial events that may affect supplies in the medium term
 

Article by Ruben Carlo Asuncion

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