BSP forecasts 5.9-6.7% inflation in August

MANILA, Philippines — There’s a chance that inflation further quickened in August on the back of increasing prices of key food items, the Bangko Sentral ng Pilipinas said.

In a statement on Wednesday, the central bank projected that inflation in August will likely land between 5.9-6.7%. The July outturn showed inflation rose 6.4% on an annual basis, the highest since October 2018. 

“Inflation for the month was driven by the continued increase in key food prices, but could be offset in part by the decline in global oil prices, the reduction in electricity rates, lower meat and fish prices, and appreciation of the peso,” the BSP said. 

The central bank expects inflation to peak by October and stay above its target range of 2-4% this year. 

That said, the domestic economy was burdened by imported inflation in past months as expensive oil prices brought about by Russia’s invasion of Ukraine and a weak peso persisted.

To combat a stubbornly high inflation, the BSP hiked its policy rate by a total of 175 basis points. The benchmark rate, used by banks and financial institutions as the basis for lending money to consumers and firms, currently stood at 3.75%.

“Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention that could prevent further broadening of price pressures, consistent with BSP’s mandate of price stability conducive to sustainable economic growth,” the central bank said.