Inflation slides to 4.7% in July, slows for sixth consecutive month

The country’s headline inflation rate slid to 4.7 percent in July 2023, marking the sixth consecutive month of deceleration. This is within the month-ahead forecast range of the Bangko Sentral ng Pilipinas (BSP) of 4.1 to 4.9 percent.

“Headline inflation cooled further to 4.7 percent in July 2023 from 5.4 percent in June. This is the sixth consecutive month that inflation has eased, strongly supporting the likelihood that inflation might be within the 2.0 to 4.0 percent target range by the fourth quarter of 2023,” Finance Secretary Benjamin E. Diokno said.

The July 2023 inflation rate is at its lowest level since the 4.9 percent in April 2022. It was below the median estimate of 4.9 percent by private analysts.

The downtrend in inflation was primarily due to the slower increase in Housing, water, electricity, gas and other fuels (4.5 percent in July from 5.6 percent in June); Food and non-alcoholic beverages (6.3 percent from 6.7 percent); and Transport (-4.7 percent from -3.1 percent). However, inflation in Education increased to 3.7 percent in July from 3.6 percent in June.

Seasonally adjusted month-on-month (MoM) inflation was at zero percent monthly growth rate in July 2023 from a 0.1 percent uptick in the previous month.

The main contributors to headline inflation for the month of July are Food and non-alcoholic beverages, contributing 2.4 percentage points (ppt); Housing, water, electricity, gas and other fuels (1.0 ppt); and Restaurants and accommodation services (0.8 ppt).

While food inflation continued its downward trend for the sixth consecutive month at 6.3 percent, it continues to be the main source of headline inflation led by vegetables (0.6 ppt); rice (0.4 ppt); flour and bread (0.3 ppt); as well as milk and eggs (0.3 ppt).

Meanwhile, the deceleration in food inflation was led by the decline in prices of meat (-1.7 percent from 0.3 percent), and the slowing down of price increase for fish (4.5 percent from 6.2 percent) and sugar (21.4 percent from 28.9 percent).

Top contributors to the non-food inflation are Food and beverage services (0.76 ppt), Actual rentals for housing (0.65 ppt), and Passenger transport services (0.33 ppt).

Core inflation, which