THE Bangko Sentral ng Pilipinas (BSP) expressed confidence that the downtrend in inflation will continue in July after a one-off blip this year, as reflected in its monthly forecast.
The BSP’s Department of Economic Research (DER) announced on Wednesday that July inflation likely settled in the range of 2 percent to 2.8 percent. This is a more optimistic forecast compared to its projection of 2.2 percent to 3 percent for June, when the rate hit 2.7 percent.
The BSP-DER said in a statement lower rice and domestic LPG prices, along with the cut in electricity rates and the recent peso appreciation, tempered inflation pressures in July.
Inflation in July could have been lower, the BSP-DER said, if not for the higher prices of petroleum and other food items.
“Looking ahead, the BSP will remain watchful of evolving inflationary environment to ensure that the monetary-policy stance remains consistent with the BSP’s price stability mandate,” the Central Bank said.
In its most recent monetary-policy meeting, the Monetary Board said it
expects inflation pressures to ease further toward the end of the year as reflected in its inflation forecasts.
In particular, the Monetary Board announced that it scaled down its inflation forecast to 2.7 percent for 2019, from 2.9 percent in May.
For 2020, the projection was also scaled down to 3 percent, from 3.1 percent in the previous meeting.
The BSP is set to meet on August 8 to review its monetary-policy settings, along with its inflation forecasts for this year and the next.
Earlier this month, Security Bank AVP and chief economist Robert Dan Roces said inflation likely hit 2.3 percent in July, as various factors have aligned to tame prices of consumer goods and service during the month.
These factors include base effects, lower electricity rates, ample food supply, falling global prices of gasoline and a strong peso.
According to BSP data, the local currency averaged at 51.155 to a dollar in July. This is stronger compared to the 51.803 average value of the peso against the dollar in the previous month.