The Bangko Sentral ng Pilipinas said Monday inflation in July 2023 likely eased to as low as 4.1 percent from 5.4 percent in June, pulled down by lower power rates, stronger peso and the decline in prices of some food items.
The BSP said in a statement the July inflation would likely settle within a range of 4.1 percent to 4.9 percent. The Philippine Statistics Authority would release the official figures later this week.
“Lower electricity rates, declines in the prices of meat, fruits, and fish items, the rollback in LPG prices and the peso appreciation could contribute to downward price pressures during the month,” it said.
Higher prices of rice and vegetables as well as increased domestic oil prices are the primary sources of upward price pressures in July.
“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation,” it said.
Bangko Sentral Governor Eli Remolona Jr. said monetary authorities should remain vigilant despite the five-month deceleration in inflation from a peak of 8.7 percent in January 2023.
Remolona noted the still elevated core inflation in a speech during the BSP’s 30th anniversary reception for the banking community Friday night.
Core inflation, the change in the costs of goods and services, excludes the volatile prices of food and energy.
“It’s too soon to declare [a] victory. Core inflation remains high. There are still upside risks to inflation – for example, risks in the form of El Niño and further supply shocks. We will wait and see,” Remolona said.
“We will analyze the data as they arrive, and that analysis will decide monetary policy down the road,” he said.
Inflation in June softened a 13-month low of 5.4 percent from 6.1 percent in May. This was also slower than 6.1 percent in June 2022.
Inflation averaged 7.2 percent in the first half, above the target range of 2 percent to 4 percent for 2023.
Core inflation also decelerated, but remained high at 7.4 percent in June from 7.7 percent in May. This brought the average core inflation in the first half to 7.7 percent.
The BSP raised its policy rates by a total of 425 basis points from May 2022 until March 2023, before taking a prudent pause in the last two Monetary Board meetings amid the sustained easing of inflation.
