Inflation further slows down in August — BSP

Inflation likely eased further to a range of between 1.3 percent and 2.1 percent in August amid the continued decline in rice prices as well as cheaper petroleum products, according to the Bangko Sentral ng Pilipinas.

The BSP’s Department of Economic Research (DER) said the lower domestic prices for gasoline, diesel and kerosene, the continued decline in rice prices as well as the downward adjustment in electricity rates dampened anew inflation pressures during the month.

The department, however, noted these factors could be partly offset by

the recent depreciation of the peso and higher prices of selected food items.

“Moving forward, the BSP will remain watchful of economic and financial developments that could affect the inflation environment in line with its commitment to price stability conducive to longterm economic growth,” the central bank said.

The last time inflation fell below two percent was at 1.8 percent in October 2016. In August of the same year, inflation averaged 1.3 percent.

On Tuesday, BSP Governor Benjamin Diokno said the Monetary Board could slash interest rates by another 25 basis points before the end of the year as inflation is seen falling below two percent within the third quarter.

“We already committed to a policy monetary easing because inflation has been behaving much, within the range of three plus or minus one percentage points. In fact, and I think some of the analysts here will agree, for the third quarter, inflation could actually be less than two percent because of the base effects and because of the favorable prices,” Diokno said.

According to Diokno, the BSP noted that price pressures have continued to dissipate, while prospects for global economic activity are likely to remain weak amid sustained trade tensions among major economies.

The BSP sees inflation easing to 2.6 percent this year before accelerating to 2.9 percent in 2020 and 2021 after kicking up to 5.2 percent last year from 2.7 percent in 2017 due to elevated oil and food prices as well as weak peso.

“The next policy meeting is in September. Anything can happen between now and next September because we meet every week. It’s a live issue,” Diokno said.