Inflation in the Philippines eased to its lowest level in six years in July, driven by falling prices of rice, other food items, and utilities. The headline inflation rate slowed to 0.9 percent, down from 1.4 percent in June, according to the Philippine Statistics Authority (PSA).
This marks the lowest inflation rate since October 2019, when it stood at 0.6 percent. In comparison, inflation in July last year was higher at 1.7 percent.
The below-target inflation provides the Bangko Sentral ng Pilipinas (BSP) more flexibility to consider cutting interest rates in an effort to boost economic activity. The BSP’s target range for average inflation is 2 to 4 percent.
According to the PSA, the slowdown was mainly driven by a smaller annual increase in the housing, water, electricity, gas, and other fuels index, which rose by 2.1 percent in July compared to 3.2 percent in June.
Food prices were also a significant factor. Cereal products—including rice, corn, flour, bread, pasta, and other bakery items—contributed a negative 3.5 percentage points to the headline rate. Vegetables, tubers, plantains, cooking bananas, and pulses contributed a negative 0.4 percentage point, while sugar, confectionery, and desserts had a slight negative impact of 0.01 percentage point.
However, core inflation, which excludes selected food and energy items, edged up to 2.3 percent in July from 2.2 percent in June. It was 2.9 percent in the same month last year.
Among the bottom 30 percent of income households, inflation turned negative at -0.8 percent, a sharp drop from 5.4 percent in July last year.
