Metro Manila (CNN Philippines, July 31) — Inflation likely eased further in July, according to latest estimates of the Bangko Sentral ng Pilipinas (BSP).
The BSP’s Department of Economic Research said commodity prices likely rose by 2 to 2.8 percent, a pace slower than June’s 2.7 percent rate. Last month’s figure was drawn from the central bank’s June forecast of 2.7-3.5 percent.
Inflation tracks price adjustments for food, utilities, and other widely-used goods. It is the central bank’s duty to ensure stable prices.
The BSP said lower prices of rice and liquefied petroleum gas mainly used for cooking are the main reasons for the slowdown, coupled with a reduction in electricity rates for the third straight month.
A stronger peso against the dollar also helped “temper inflation pressure” during the month, the central bank said in a statement Wednesday.
On the other hand, higher fuel prices and food costs may have partly offset these markdowns. Pump prices went up during the first three weeks of the month to reflect adjustments in world crude rates.
Despite this, inflation will still fall within the 2-4 percent target range. Price increases averaged 3.4 percent from January to June. BSP Governor Benjamin Diokno expects a sustained inflation slowdown until the end of the year, with the BSP full-year estimate set at 2.7 percent.
READ: Inflation seen below 4% until 2021
Inflation has consistently declined coming from the nine-year peak of 6.7 percent in September and October last year. This trend has allowed the BSP to begin unwinding a series of rate hikes it unleashed in 2018, beginning with an interest rate cut on May 9.
Diokno said lower inflation readings bolster the need to normalize policy rates, adding that market watchers can expect more rate cuts “in the months to come.”
The Philippine Statistics Authority will release official inflation data on Tuesday, August 6. The latest print will likely settle below the 5.7 percent climb logged in July 2018.
READ: More interest rate cuts coming, BSP chief hints
