The central bank expects the inflation rate to dip even further in August providing policy makers with fresh impetus to reduce borrowing costs and help pump prime the country’s moderating economic growth.
In a press statement, the Bangko Sentral ng Pilipinas said its economists see the pace of increases in consumer prices this month to settle within the 1.3-2.1 percent range — substantially lower than the two-year low of 2.4 percent recorded last July.
“Lower domestic prices for gasoline, diesel and kerosene, the continued decline in rice prices as well as the downward adjustment in electricity rates dampened inflation pressures during the month,” the central bank’s economists said.
They added, however, that the elements that would help lower inflation for the month “could be partly offset by the recent depreciation of the peso and higher prices of selected food items.”
Earlier this week, BSP Governor Benjamin Diokno promised at least one more 25-basis point reduction in the central bank’s key overnight borrowing rate, which determines the level of interest rates charged across the economy./tsb