INFLATION in July slightly rose to 2.8 percent from the revised 2.7 percent a month ago on higher increases in water and electricity rates and fuel prices, the Philippine Statistics Authority said Friday.
The July inflation was also faster than 1.9 percent in the same month last year. This brought the average inflation in the first seven months to 3.1 percent, slightly higher than the mid-point of the target range of 2 percent to 4 percent this year.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the July inflation confirmed the regulator’s assessment of a benign inflation conditions prevailing in the country.
“The BSP continues to see a manageable inflation outlook over the policy horizon after taking into consideration the latest inflation reading in July. Inflation is projected to remain close to the mid-point of the national government’s target range of 2 to 4 percent in 2017 to 2019,” Espenilla said in a statement.
He said the inflation path would be supported by the strength of the domestic economy as well as negative base effects in the last four months of 2017.
He said the within-target path of inflation over the policy horizon provided the Bangko Sentral the flexibility to assess its monetary tools to enhance further its responsiveness to the evolving requirements of the economy.
Economic Planning Secretary Ernesto Pernia said the July inflation was lower than the market expectations of 3 percent and well within the government’s target of 2 percent to 4 percent.
He said as the Philippines entered the lean months for rice production, it was important for the government to ensure adequate supply of rice to prevent inflationary pressures.
“… Along this line, the planned government-to-private sector rice importation scheme is a step in the right direction. Congress should also act fast to amend domestic laws to end the quantitative restrictions on rice,” Pernia said.
He warned that despite slower rice inflation, dwindling stocks could exert upward pressures on food prices in the near term.
The PSA said higher annual prices in July were registered in the indices of housing, water, electricity, gas and other fuels (2.2 percent); transport (3.8 percent); education (2.3 percent); and restaurant and miscellaneous goods and services (2.1 percent).
Slower annual growths were noted in the indices of food and non-alcoholic beverages at 3.3 percent and furnishing, household equipment and routine maintenance of the house at 2.0 percent. The rest of the commodity groups retained their previous month’s rates.
DBS Bank of Singapore said the current inflation trajectory clearly put less pressure on Bangko Sentral to act on its policy rates, citing a recent comment from Espenilla that the central was not in a hurry to tighten its monetary policy stance.
“… This is despite being faced with a gradual policy tightening in the US. And the central bank also suggested no reason to panic even as the peso remains weak.. ,” DBS said.