Aug. inflation tipped at 1.6%-2.4% on price pressures

INFLATION likely settled between 1.6% and 2.4% in August, staying close to the low end of the central bank’s target range as a cut in electricity rates offset higher costs of oil and rice, the Bangko Sentral ng Pilipinas (BSP) said.

The forecast range was near estimates offered for June and July, when the actual rate was both 1.9%, just below the BSP’s 2-4% target band. Inflation was 0.6% in August 2015.

“The BSP forecast suggests that August inflation could settle within the 1.6-2.4% range,” BSP Governor Amando M. Tetangco said in a text message sent over the weekend.

“Upward price pressures may come from higher domestic oil and rice prices. However, these could be partly offset by the decline in the power rates in Meralco-serviced areas and lower prices of selected vegetable items.”

Retail pump prices rose in August as world crude rates rose to an eightweek high of nearly $50 a barrel, according to the Department of Energy’s web site. In contrast, power distributor Manila Electric Co. announced an 11-centavo per kilowatt-hour reduction in power rates for the month due to a lower generation charge.

Vegetable prices also went down after the El Niño phenomenon ended, as observed in July.

Inflation averaged 1.4% in the seven months ending July.

Monetary officials expect the rise in prices of widely-used goods and services to pick up during this semester as base effects kick in, coming from record-low inflation rates seen a year ago.

The BSP expects full-year inflation at 1.8%, down from a previous 2% forecast to factor in a continued slump in world crude prices, dampened

prospects for global growth, and lowerthan-expected price upticks for the past two months.

Looking ahead, Mr. Tetangco said the BSP “will continue to monitor emerging price conditions to ensure price stability conducive to a balanced and sustainable economic growth.”

Philippine gross domestic product grew by 7% during the second quarter, bringing the first-half tally to 6.9% which was within the government’s 6-7% growth target for the year.

The central bank crafts monetary policy to ensure stable prices. During its rate-setting meeting last Aug. 11, the Monetary Board kept the benchmark policy rate at 3%, citing subdued inflation and robust domestic activity. —