BSP projects higher August inflation; forecast range 4.8%-5.6%

The Bangko Sentral ng Pilipinas on Thursday projected higher inflation in August, noting increases in the price of rice and other agricultural products as well as fuel, higher transport cost, and the weaker peso during the month.

“The  BSP projects August 2023 inflation to settle within the range of 4.8 to 5.6 percent,” the central bank said in a statement. 

August inflation data are due September 5. If the BSP projection holds, it will be the first time that the consumer price index will rise after a steady deceleration since February. Headline inflation in July eased to 4.7 percent year-on-year, its slowest annual pace since March last year.

The central bank started raising interest rates in May last year to tame inflation, lifting overnight rates by a total 4.25 points to 6.25 percent. It paused the policy tightening cycle in May as inflation sustained its easing trend, heading towards its target range of 2 to 4 percent.

The next policy meeting is set on September 17.

The BSP said inflation likely accelerated in August due to “higher prices of rice and other agricultural commodities due to weather disturbances, sharp rise in fuel prices as well as increased transport costs owing to higher train fares and toll rates, and the peso depreciation are the primary sources of upward price pressures in August.”

It said lower electricity rates from major providers could have tempered the movement of August inflation.

“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data dependent approach to monetary policy formulation,” it said.