Philippine inflation in July edges up

MANILA, Philippines – Philippine inflation – the movement of prices of basic goods and services – has slightly picked up pace in July, which closed higher at 2.8% from the revised 2.7% in June, due to higher prices of housing, utilities, transport, education, and other miscellaneous services.

The July 2017 inflation remains below the midpoint of the 2% to 4% target set by the Bangko Sentral ng Pilipinas (BSP).

BSP Governor Nestor Espenilla Jr. said the central bank continues to see a manageable inflation outlook over the policy horizon after taking into consideration the latest inflation reading in July.

This brought the average inflation to 3.1% in the first 7 months of 2017, from 1.4% in the same period last year.

Espenilla said inflation is projected to remain close to the midpoint of the 2% to 4% target from 2017 to 2019. (READ: Standard Chartered cuts Philippine GDP forecast)

"The inflation path will be supported by the continued strength of the domestic economy as well as negative base effects in the last 4 months of 2017," he added.

GDP target remains

Economic managers – through the Development Budget Coordination Committee (DBCC) – maintained the projected gross domestic product (GDP) target of 6.5% to 7.5% despite the slowdown in the first quarter of 2017.

Weak private consumption brought about by the absence of election-related spending pulled down the GDP growth of the Philippines to 6.4% in the first quarter of 2017, from 6.6% in the same period last year. (READ: PH economy grows slower by 6.4% in Q1)

Higher annual increments were registered last month by the transport index with 3.8%; education with 2.3%; housing, water, electricity, gas, and other fuels with 2.2%; as well as restaurant and miscellaneous goods and services with 2.1%.

Slower annual growth was noted in the indices of food and non-alcoholic beverages, furniture, as well as household equipment in July.

Espenilla is set to preside over his first rate-setting meeting as BSP governor and Monetary Board chairman on Thursday, August 10. He succeeded former BSP chief Amando Tetangco Jr. who ended his unprecedented two 6-year terms last July 2.

"The within-target path of inflation over the policy horizon provides the BSP with the flexibility to assess our monetary tools to enhance further our responsiveness to the evolving requirements of the economy with due consideration of external factors with potential impact on domestic monetary conditions," the BSP chief said.  –