2.5% inflation rate in June ‘not alarming’

Presidential Spokesperson Harry Roque said a higher inflation rate was “expected” because of the three-month enhanced community quarantine (ECQ) nationwide to contain the coronavirus disease (Covid-19) pandemic. (File Photo: Ja Ma/Unsplash)

MANILA – Malacañang on Tuesday downplayed the country’s inflation which increased to 2.5 percent in June this year, saying it is “not alarming.”

On Tuesday, the Philippine Statistics Authority (PSA) disclosed that inflation in the sixth month this year accelerated to 2.5 percent from 2.1 percent last May, primarily due to a faster annual rise in the transport index, specifically of tricycle fares.

Presidential Spokesperson Harry Roque said a higher inflation rate was “expected” because of the three-month enhanced community quarantine (ECQ) nationwide to contain the coronavirus disease (Covid-19) pandemic.

“Well, napakababa pa rin po niyang 2 percent. At inaasahan po natin na kahit na paano tumaas kasi nga po nanggaling tayo sa complete lockdown (Well, 2 percent is still low. We expect it to increase because we just came from a complete lockdown),” he said in a virtual presser.

Roque said now that the economy has reopened, there will be a higher demand for transportation despite only a few options available.

“Mas mataas ang demand at siguro po limitado pa rin ang supply kaya medyo bahagyang pong umakyat po ang ating inflation rate pero hindi naman nakakabahala ‘yan dahil 2 percent po ‘yan (The demand is higher but perhaps we have limited supply that’s why the inflation rate slightly increased. But this is not alarming since that is still 2 percent),” he said.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno, however, said country’s inflation rate remains manageable despite an uptick to a three-month high last June.

Diokno said the inflation rate last June is within the central bank’s 1.9 percent to 2.7 percent forecast for the month and “is consistent with the BSP’s prevailing assessment that inflation pressures remain limited due largely to the adverse impact of the Covid-19 pandemic on the domestic and global economic conditions.”

He said the latest forecasts by monetary officials point to a benign inflation environment over the policy horizon, with the average inflation this year seen at 2.3 percent, while it is at 2.6 percent for next year and 3 percent for 2022.

Diokno said domestic recovery is seen to be U-shape on a quarterly basis with output likely to contract further in the remaining quarters of 2020.

“Growth is expected to recover in 2021 once the impact of government policy support measures gains traction,” he said.

Currently, the transport sector is operating on a 50-percent capacity to minimize the risk of contracting Covid-19.

Operations of the Metro Rail Transit Line 3 (MRT-3) have also been temporarily suspended for approximately five days beginning Tuesday until reverse transcription-polymerase chain reaction (RT-PCR) testing confirms negative a sufficient number of personnel to resume at least limited operations.

The agency will now prioritize the disinfection of facilities and RT-PCR testing of MRT-personnel. Meanwhile, bus augmentation will be increased.