Near 6-year low inflation expected in July

With rice prices still seen to have dropped further recently, the central bank has forecast that increases in consumer prices likely slowed even more in July, following the five-and-a-half-year lows of 1.4 percent in June and 1.3 percent in May.

- Derco Rosal

As such, private-sector economists said that the possibly very low July headline inflation rate would pave the way toward another interest rate cut when the policy-setting Monetary Board (MB) next decides on the monetary policy stance on Aug. 28.

Last month's inflation could have slowed by as much as 0.8 percentage points (ppts) to 0.5 percent, according to the Bangko Sentral ng Pilipinas' (BSP) forecast released on Thursday, July 31.

May's inflation has become the upper end of the BSP's forecast range, with 0.5 percent as the lower end—if realized, the slowest in nearly six years. The BSP's forecast for July is lower than its June projection of 1.1 to 1.9 percent.

Likely factors that have contributed to an uptick in price hikes last month were "higher meat and vegetable prices partly due to unfavorable weather conditions, increased electricity rates, elevated domestic fuel costs, and the depreciation of the peso."