MANILA: Philippine inflation proved stubborn after it unexpectedly quickened for the first time in seven months in August, due largely to an uptick in food and transport costs, keeping the pressure on the central bank to maintain its hawkish stance.
The consumer price index (CPI) rose 5.3 per cent year-on-year in August, above the 4.7 per cent forecast of economists in a Reuters poll, which matched the previous month’s pace, but within the central bank’s 4.8 per cent to 5.6 per cent projection for the month.
Excluding volatile energy costs, core inflation eased to 6.1 per cent in August from the previous month’s 6.7 per cent.
Tuesday’s data affirmed the central bank’s belief the country was not yet out of the inflation woods and raised the possibility it could resume raising its policy rate after keeping it steady at 6.25 per cent at its last three meetings.
Following the data, the Bangko Sentral ng Pilipinas (BSP) said in a statement it “stands ready to adjust the monetary policy stance as necessary” to prevent the broadening of price pressures and the emergence of additional second order effects.
August inflation brought year-to-date inflation to 6.6 per cent, well outside the central bank’s 2 per cent-4 per cent comfort range.
ING economist Nicholas Mapa said rice, transport and electricity costs will determine the inflation path for the next few months. While he expects the BSP to stay on hold, he said in a post on platform X, that it “could consider a hike if this becomes a trend”.
The Bangko Sentral ng Pilipinas (BSP) next meets on Sep 21 to review policy.
To keep food prices at bay, the Philippines has imposed price ceilings on rice, which it said would remain in effect as long as the government deemed them necessary. Food accounts for 35 per cent of CPI.
Following the unexpected rise in August consumer prices, the economic planning minister also said the Philippines, one of the world’s biggest rice importers, may reduce tariffs on the grain to help lower domestic costs.
“To partially counterbalance the rise in global prices and alleviate the impact on consumers and households, we may implement a temporary and calibrated reduction in tariffs,” Economic Planning Secretary Arsenio Balisacan said.
Source: CNA
