Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Philippines inflation unexpectedly quickens to 5.3% in August

Published 09/04/2023, 10:09 PM
Updated 09/04/2023, 10:11 PM
© Reuters. FILE PHOTO: People eat at a restaurant in Quezon City, Metro Manila, Philippines, January 26, 2023. REUTERS/Lisa Marie David/File Photo
USD/PHP
-
PSI
-

By Neil Jerome Morales and Enrico Dela Cruz

MANILA (Reuters) - Philippine inflation proved stubborn after it unexpectedly quickened for the first time in seven months in August, due largely to an uptick in food and transport costs, keeping the pressure on the central bank to maintain its hawkish stance.

The consumer price index (CPI) rose 5.3% year-on-year in August, above the 4.7% forecast of economists in a Reuters poll, which matched the previous month's pace, but within the central bank's 4.8% to 5.6% projection for the month.

Excluding volatile energy costs, core inflation eased to 6.1% in August from the previous month's 6.7%.

Tuesday's data affirmed the central bank's belief the country was not yet out of the inflation woods and raised the possibility it could resume raising its policy rate after keeping it steady at 6.25% at its last three meetings.

Following the data, the Bangko Sentral ng Pilipinas (BSP) said in a statement it "stands ready to adjust the monetary policy stance as necessary" to prevent the broadening of price pressures and emergence of additional second order effects.

August inflation brought year-to-date inflation to 6.6%, well outside the central bank's 2%-4% comfort range.

ING economist Nicholas Mapa said rice, transport and electricity costs will determine inflation path for next few months. While he expects the BSP to stay on hold, he said in a post on platform X, it "could consider a hike if this becomes a trend."

The Bangko Sentral ng Pilipinas (BSP) next meets on Sept 21 to review policy.

To keep food prices at bay, the Philippines has imposed price ceilings on rice, which it said would remain in effect as long as the government deemed them necessary. Food accounts for 35% of CPI.

© Reuters. FILE PHOTO: People eat at a restaurant in Quezon City, Metro Manila, Philippines, January 26, 2023. REUTERS/Lisa Marie David/File Photo

Following the unexpected rise in August consumer prices, the economic planning minister also said the Philippines, one of the world's biggest rice importers, may reduce tariffs on the grain to help lower domestic costs.

"To partially counterbalance the rise in global prices and alleviate the impact on consumers and households, we may implement a temporary and calibrated reduction in tariffs," Economic Planning Secretary Arsenio Balisacan said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.