Stable rice supply softens inflation rate
The Philippine Statistics Authority reported that inflation in August dropped to a 35-month low of 1.7 percent from 2.4 percent in July, a development that could prompt monetary authorities to further reduce interest rate in a meeting later this month. A further decline in the price of rice and non-alcoholic beverages and base effect caused inflation to fall sharply in August. The inflation rate in August last year stood at 6.4 percent before peaking to 6.7 percent in September and October in the same year. The much-lower inflation rate last month is a clear signal for the Bangko Sentral ng Pilipinas to reduce interest rates on the funds it lends to private banks, which, in turn, will pass the lower cost of borrowing to consumers and other clients. The reduced cost of borrowings, hopefully, will spur companies to expand, hire more workers and eventually increase economic activities. BSP Governor Benjamin Diokno noted that “ample domestic food supply conditions along with lower global oil prices have contributed to a manageable inflation environment.”
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