Inflation hits highest level in almost 3 years

MANILA, Philippines - The price of goods and services in the country hit its highest in almost three years after the inflation rate settled at 4.9 percent in July, the Philippine Statistics Authority (PSA) reported on Tuesday.

PSA said the high inflation rate since November 2011's 4.7 percent was mainly due to an uptick in the heavily weighted food and non-alcoholic beverages index.

"Contributing also to the uptrend were the faster annual hikes in the indices of housing, water, electricity, gas and other fuels; health; transport; recreation and culture; and education," PSA said.

Core inflation stood at 3 percent from the 2.8 percent posted the previous month and 2.3 percent a year ago.

Inflation in the National Capital Region (NCR) jumped to 3.9 percent from 3.6 percent in June and 1 percent a year ago, while inflation in areas outside NCR soared to 5.1 percent from 4.7 percent the previous month and 2.9 percent in July 2013.

The National Economic and Development Authority (NEDA) said the July inflation is still within government's target of 3 to 5 percent for 2014.

"NEDA still expects that the country’s headline inflation rate for the full year 2014 will average around 4.4 percent,” said NEDA Director-General Arsenio Balisacan. He added that the move of the central bank's Monetary Board to hike interest rates was meant to temper price pressures.

“The monetary authorities’ move to hike the policy rate was also in accordance with the BSP’s appreciation of the external environment, particularly monetary policy in advanced economies,” he added.

Balisacan said short term interventions may focus on ensuring supply adequacy by allowing sufficient levels of imports to augment local production of rice and other key commodities.