Inflation rate eased to 1.8 percent in August from 1.9 percent in July, on slower increase in food prices, the National Economic and Development Authority said Tuesday.
The August figure brought the average inflation rate in the first eight months to 1.5 percent, below the government’s target range of 2 percent to 4 percent for 2016.
Economic Planning Secretary Ernesto Pernia said “the relatively low and manageable inflation environment during the first eight months of 2016 is expected to continue for the rest of the year as risks around the inflation projections are considered to be low.”
“We are thus expecting full-year inflation to be close to the lower end of government’s target of 2 percent to 4 percent,” Pernia said.
Food inflation slowed down to 2.5 percent in August from 2.8 percent in July on slower price adjustments of meat, vegetables and corn, which tempered higher prices of rice, fruits, sugar and non-alcoholic beverages.
“Food inflation will stay stable given ample supply of palay and corn, which could keep upward price pressures at bay. Moreover, the plan to import more rice through next year will add to the country’s buffer stock and ensure that overall food prices remain stable,” Pernia said.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the latest inflation figure indicated that the monetary policy stance remained appropriate.
“Inflation for August of 1.8 percent is within the BSP forecast range of 1.6 percent to 2.4 percent. The August turnout was slower than the prior month [of 1.9 percent] due to slower increases in food and non alcoholic beverages,” Tetangco said in a text message.
“There appears to be no strong need to change stance of policy. But we are mindful of possible weather-related supply disruptions as well as financial market volatilities from investments rebalancing. We will make adjustments as needed,” Tetangco said.
Tetangco said upward price pressures to inflation in August might come from higher domestic oil and rice prices. However, these could be partly offset by the decline in the power rates in Meralco-serviced areas and lower prices of selected vegetable items.
Tetangco said moving forward, Bangko Sentral would continue to monitor emerging price conditions to ensure price and financial stability.
He said monetary authorities would continue to be mindful of external developments, particularly geopolitical risks that could trigger volatility in commodity prices and portfolio rebalancing.