Philippine August inflation at highest level since late 2018

September 7, 2021 - 2:32 PM
A vendor tends to a customer behind a plastic barrier for protection against the coronavirus disease (COVID-19) at a public market, in Manila, Philippines, August 18, 2020. (Reuters/Eloisa Lopez,)
  • Headline CPI +4.9% y/y, breaches 2%-4% target range
  • Core inflation quickens to 3.3% from 2.9% in July
  • Cbank says to maintain accommodative policy

MANILA — Philippine August inflation hit its fastest pace since December 2018, topping the upper end of this year’s target, as the central bank signaled no plans for immediate action and vowed to keep its monetary policy accommodative as long as needed.

The Consumer Price Index rose 4.9% from a year earlier, government data showed on Tuesday, hitting the upper end of the central bank’s 4.1%-4.9% projection for the month. It was also well above the 4.4% median forecast in a Reuters poll.

Core inflation, which excludes volatile food and fuel prices, accelerated to 3.3% from 2.9% in July.

Inflation averaged 4.4% in January-August, exceeding the year’s 2%-4% target range.

The jump was mainly driven by increased price pressures in the heavily-weighted food basket, the Philippine Statistics Authority said.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the August figure was in line with the central bank’s assessment that inflation could accelerate before easing back to within the target range by year-end.

“The risks to the inflation outlook remain broadly balanced over the policy horizon,” he said in a statement.

Inflation was likely to fall towards the mid-point of the target in 2022-2023, assisted by the implementation of non-monetary measures and reforms to address supply-side pressures on key food items, Diokno said.

“The BSP stands ready to maintain its accommodative monetary stance for as long as necessary to support the economy’s sustained recovery to the extent that the inflation outlook would allow,” he said.

The BSP, which holds its next monetary policy meeting on Sept. 23, has kept its benchmark interest rate steady at a record low of 2.0% since November.

Last week, Diokno said the BSP still has ample leeway to support the economic recovery, with conventional policy instruments far from being fully utilized.

—Writing by Enrico Dela Cruz Editing by Ed Davies