Inflation at 6.1% undermined the strength of the peso in June

IN A BAG A woman carries a reusable bag while shopping for vegetables at an open market on Sunday, July 3, 2022. Ban Toxics called on buyers and sellers to move away from single-use plastic bags and opt for eco-friendly alternatives. PHOTO BY MIKE DE JUAN

(UPDATED) The Philippine Statistics Authority (PSA) said on Tuesday that the country’s headline inflation rose to 6.1 percent in June, pushing the peso’s purchasing power down to its lowest level since 2018.

The current rate is the highest in more than three years, or since October 2018, when it stood at 6.9 percent, according to PSA data. It falls within Bangko Sentral ng Pilipinas’ projected range of 5.7 to 6.5 percent per month.

The central bank’s forecast range of average inflation of 2 to 4 percent for 2022 has been exceeded by a 4.4 percent rise in consumer prices this year.

National Statistician Dennis Mapa explained in a virtual press briefing that the reason for the higher inflation rate in June 2022 was the faster rise in prices for food and non-alcoholic beverages, which have an inflation rate of 6 percent and a share of 58.3 percent. growth of general inflation in the country.

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He said faster price increases for meat and other parts of slaughtered land animals such as poultry, with an inflation rate of 8.1 percent; and rice, with an inflation rate of 2 percent, was a contributor to food and soft drink inflation.

Transportation was the second commodity group to show higher inflation in June 2022, up 31.7% from the country’s overall inflation growth, Mapa added.

This is the result of the continued rise in fuel costs – 53.9% for gasoline, 92.5% for diesel and 2.7% for jeeps, as well as other types of roadside passenger transport.

Alcoholic beverages and tobacco were the third commodity group to post higher inflation rates in June 2022, Mapa noted, with an inflation rate of 7.8 percent and a 3 percent contribution to headline inflation.

Meanwhile, he added that the inflation rate for the poorest or bottom 30 percent of families increased to 5 percent in June from 4.3 percent a year earlier and was the highest since 5.3 percent in August 2021.

In addition, the purchasing power of the peso fell to 0.87 in June, the lowest level since the 2018 base year, Mapa said.

He said: “In our report, it is only 0.87, which means that in June 2022 our peso is now worth only 87 centavos,” and went on to explain that as inflation rises, the value of the peso as a unit of exchange decreases. purchases of goods and services are declining.