Slowdown of PH inflation in August ‘within expectations’: BSP

Last August’s inflation rate is slower than the 2.7 percent last July but is faster than year-ago’s 1.7 percent. (File Photo by ja ma/Unsplash)

MANILA – Domestic inflation rate in August slowed to 2.4 percent after two consecutive months of uptick due to the slower rate of price increases in the heavily-weighted food and non-alcoholic beverages.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, in a message to journalists on Friday, said this turn-out is within the central bank’s 2.5-3.3 percent inflation forecast for last month and “is consistent with the expectation that inflation will remain benign over the policy horizon.”

“The balance of risks tilts toward the downside owing largely to potential disruptions to the domestic and global economic activity of the ongoing pandemic,” he said.

Last August’s inflation rate is slower than the 2.7 percent last July but is faster than year-ago’s 1.7 percent.

Average inflation in the first eight months this year stood at 2.5 percent, at the lower half of the government’s 2-4 percent target band for 2020-22.

Monetary officials forecast this year’s inflation to average at 2.6 percent while it is 3 percent and 3.1 percent for 2021 and 2022, respectively.

Data released by the Philippine Statistics Authority (PSA) on Friday also showed that core inflation, which excludes volatile food and oil items, decelerated to 3.1 percent from last July’s 3.3 percent, resulting in an average of 3 percent. Core inflation in August last year is lower at 2.9 percent.

Diokno said the “prevailing interest rate environment and ample liquidity in the financial system, reflecting the significant monetary policy easing and liquidity enhancing measures undertaken thus far by the BSP, are seen to provide sufficient support to economic activity.”

“Early signs of recovery in domestic activity are being noted, with further improvements expected as containment measures are relaxed further, and firms and households adjust better to the post-pandemic operating environment,” he said.

Diokno said monetary authorities “will continue to evaluate the transmission of the BSP’s policy actions to the economy along with the recently approved fiscal measures to address the public health crisis.”

“The BSP stands ready to deploy all available measures in its toolkit in fulfillment of its policy mandate as it continues to assess the impact of the global health crisis on the domestic economy,” he added.