August inflation slows to 1.8%

Inflation slowed to 1.8 percent year-on-year in August on slower food and beverage price increases, indicating that the Bangko Sentral ng Pilipinas (BSP) will not tweak policy rates this month.

In a report Tuesday, the Philippine Statistics Authority (PSA) said the rate of increase in prices of basic goods last month was lower than the 1.9 percent posted in July.

The headline inflation in August was nonetheless higher than the 0.6 percent recorded a year ago on the back of downward price pressures in food and oil products.

As of end-August, inflation averaged 1.5 percent, below the government’s 2- to 4-percent target for 2016. “These are consistent within our view that inflation remains manageable and will move to within forecast by 2017-2018,”  BSP Governor Amando M. Tetangco Jr. said.

He said “there appears to be no strong need to change stance of policy.” The Monetary Board, the BSP’s highest policy-making body, will discuss interest rates in its meeting on Sept. 22.

Tetangco nonetheless said that monetary authorities  remained “mindful of possible weather-related supply disruptions as well as financial market volatility from investment rebalancing.”

In a separate statement, Economic Planning Secretary Ernesto M. 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 2-4 percent,” added Pernia, who is also the director general of the National Economic and Development Authority (Neda). Ben O. de Vera