Factory costs are easing, but oil could change the picture

Producer prices rose 3% in June, slower than May.

Manufacturers saw cost pressures ease slightly in June after factory gate prices rose at a slower pace, offering businesses some breathing room before renewed oil price volatility clouds the outlook.

The Producer Price Index (PPI) rose 3% year on year in June from 3.1% in May, according to the Philippine Statistics Authority. The PPI measures changes in the prices manufacturers receive for goods before they reach wholesalers and retailers. The slower increase was driven mainly by petroleum-related products, electronics, and basic metals.

Petroleum products, a major input for many industries, accounted for 33.9% of the slowdown after price growth eased to 2.4% from 3% in May.

The softer increase could help manufacturers manage production costs, which may eventually influence the prices of goods reaching consumers.

Food manufacturing, meanwhile, moved in the opposite direction, with prices rising faster at 1.7% in June from 1.5% in May.

Whether this relief continues will largely depend on global energy prices. The June slowdown was partly due to a temporary correction in global crude oil prices after a US-Iran ceasefire. With tensions in the Middle East resurfacing in July, oil prices have climbed again, raising the possibility that production costs could accelerate in the coming months.

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