Inflation Eases to 2.4% in August, Lowest in 3 Months

Inflation in the Philippines slowed to 2.4 percent in August, a consequence of weak demand driven by the coronavirus pandemic. It was also below the forecast set by the Bangko Sentral ng Pilipinas.

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The Consumer Price Index was down from the 2.7 percent recorded in July, the highest in six months, the Philippine Statistics Authority said Friday, September 4. The BSP had earlier pegged the number to be between 2.5 percent to 3.3 percent.

Core inflation, which excludes volatile food and fuel prices, was 3.1%, versus 3.3% in July.

The BSP had also boosted its inflation forecast for the year to 2.6 percent, which might have factored in an increase in economic activity as the country gradually eases up on quarantine restrictions.

“For the balance of the year, we expect inflation to remain at the lower end of the BSP’s inflation target band given depressed economic activity with the stronger PHP also limiting imported inflation,” Nicholas Mapa, ING senior economist for the Philippines, said.

BSP Governor Benjamin Diokno said the latest inflation was in line with their view that inflation is on course to remain within target over the policy horizon. He added that no adjustments in monetary policy were forthcoming at least for the next two quarters. 

“We expect the BSP to keep policy levers untouched well into 2021,” Mapa said.