PH inflation in July pegged at 5%

The monthly readout on overall inflation in the Philippines is largely expected to ease further below 5 percent in July from 5.4 percent in June, in line with the Bangko Sentral ng Pilipinas’ (BSP) own projections.

The yearly change in the growth rate of the prices of goods and services that households commonly purchase has been receding month after month since registering at 8.7 percent in January.

The Philippine Statistics Authority will come out with the official reading for July by Aug. 4.

Goldman Sachs said in a commentary that the consensus among forecasters was pegged at 4.9 percent but, for themselves, the United States-based investment banking group pencilled in 5.1 percent.

Base effects

This is “mainly due to higher vegetables and fish prices, partially offset by lower electricity prices,” the American group said.

The Netherlands-based ING Bank said the downtrend will continue thanks to favorable base effects, and inflation will settle at 4.8 percent.

ING Bank also expects core inflation, which excludes items like food and fuel whose price changes are considered volatile, to ease to 7 percent in July from 7.4 percent in June.

Robert Dan Roces, chief economist at Security Bank Corp., expects headline inflation at 4.7 percent with leeway for risks within 4.5 percent to 5.1 percent.

“The favorable base effects that helped offset the increase in food prices may continue to play a role in keeping inflation in check in the short term,” Roces said.

“[T]he food sector may continue to experience volatility, which could influence inflation dynamics in the coming months, and indeed still provides significant upside risks,” he added. “Factors such as weather-related disruptions, supply chain issues, or changes in consumer demand might contribute to this volatility.”

Meanwhile, Jonathan Ravelas, managing director of eManagement for Business and Marketing Services, is forecasting higher at 5.2 percent.

At a reception hosted by the BSP and held in honor of newly installed Governor Eli Remolona Jr., the new BSP chief said they were beginning to see “tantalizing fruits of our efforts” in taming inflation.

Remolona was alluding to one of the most aggressive monetary tightening policies done by central banks in response to the world’s recovery from the COVID-19 pandemic.

From May 2022 to March 2023, the Monetary Board raised the BSP’s policy rate by a total of 4.25 percentage points from a historic low of 2 percent to 6.25 percent. INQ

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