July inflation likely at 2.2% to 3% — BSP

MANILA, Philippines — Inflation likely settled between 2.2 and three percent in July from 2.5 percent in June on the back of more expensive petroleum products and higher rice prices, according to the Bangko Sentral ng Pilipinas.

The BSP’s Department of Economic Research (DER) said the upward price pressures from higher domestic petroleum prices as well as the uptick of rice prices were partly offset by slightly lower electricity rates in Meralco-serviced areas and the continued appreciation of the peso against the dollar.

“Going forward, the BSP will continue to monitor economic and financial developments to ensure that monetary policy settings remain consistent with the objective of price stability conducive to a balanced and sustained growth of the economy,” the BSP said.

Latest data from the Philippine Statistics Authority (PSA) showed that inflation averaged 2.5 percent in the first half after accelerating to 2.5 percent in June amid the pandemic.

BSP Governor Benjamin Diokno said inflation may settle at 2.3 percent this year before accelerating to 2.6 percent next year, well within the BSP’s two to four percent inflation target.

“The relatively benign inflation outlook in the policy horizon provides space for monetary policy adjustments to complement the national government’s efforts in mitigating the adverse impact of the COVID-19 public health crisis,” Diokno earlier said.

Moreover, the BSP chief also said the central bank remains vigilant in monitoring domestic and international developments for any other emerging risks to the outlook for both inflation and economic activity.

Diokno said the worst is over for the Philippine economy and is now on the way to recovery at this point after the worst quarter in the second quarter.

“I foresee a hockey stick like recovery with the lowest point in the second quarter. But the third quarter will be better and the fourth quarter will be even better. We expect a strong rebound in 2021,” Diokno said.