The Bangko Sentral ng Pilipinas said Wednesday inflation in August likely accelerated to as high as 6.7 percent from 6.4 percent in July on higher food prices.
It said in a statement the August inflation would likely settle within a range of 5.9 percent to 6.7 percent.
“Inflation for the month was driven by the continued increase in key food prices, but could be offset in part by the decline in global oil prices, the reduction in electricity rates, lower meat and fish prices, and appreciation of the peso,” the BSP said.
Inflation in July hit a 45-month high of 6.4 percent from 6.1 percent in June, driven by faster increases in the prices of food, nonalcoholic beverages and higher transport fares. The July outturn was also faster than the 3.7 percent in July 2021.
Inflation averaged 4.7 percent in the first seven months, above the target range of 2 percent to 4 percent for 2022.
The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, on Aug. 18 raised for the fourth time the benchmark interest rate by 50 basis points to 3.75 percent to tame the accelerating inflation.
This brought the total policy rate increase this year to 175 basis points. The BSP kept the policy rate at a record low of 2 percent for the entire 2021 to support the economy’s recovery from the pandemic.
The board said while the forecasts for 2023 and 2024 were reduced to 4.0 percent and 3.2 percent, respectively, the inflation target remained at risk over the policy horizon, owing to broadening price pressures.
Elevated inflation expectations highlight the risk of further second-round effects, it said.
The board said the upside risks also continued to dominate the inflation outlook up to 2023 on the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, the sharp increase in the price of sugar and pending petitions for transport fare increases.