BSP sees July inflation settling at 0.5% to 1.3%

THE BANGKO SENTRAL ng Pilipinas (BSP) on Thursday said it expects headline inflation to settle below 2% in July.

- By Luisa Maria Jacinta C. Jocson Senior Reporter

The central bank's month-ahead forecast showed that inflation likely fell within the 0.5%-to-1.3% range in July. If realized, July inflation would be slower than the 1.4% print in June and the 4.4% clip a year ago.

"Upward price pressures for the month are likely to be driven by higher meat and vegetable prices partly due to unfavorable weather conditions, increased electricity rates, elevated domestic fuel costs, and the depreciation of the peso," it said.

Manila Electric Co. (Meralco) hiked rates by P0.4883 per kilowatt-hour (kWh) in July, bringing the overall rate for a typical household to P12.6435 per kWh from P12.1552 per kWh a month earlier.

The peso fell to P58.32 against the greenback at end-July from its finish of P56.33 at end-June.

The peso's close at end-July was its weakest in almost six months or since its P58.34 finish on Feb. 4.

"These price pressures, however, could be partially offset by the continued decline in rice prices," the BSP added.

Rice inflation has been steadily declining for the past few months amid several government interventions for the staple grain. In June, rice inflation contracted for the sixth straight month to a record 14.3%, the biggest drop since 1995.

"Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making." The local statistics agency is set to release the July inflation data on Aug. 5 (Tuesday).

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