Inflation accelerated to a 33-month high in July amid soaring food prices and increases in utility rates and transportation fares.
From 4.4 percent in June, the rate rose to 4.9 percent last month, the fastest pace since the 5.2 percent recorded in October 2011.
Without food or oil prices, core inflation settled at three percent in July, up from 2.8 percent in June.
“The July inflation outturn is within the BSP’s forecast range, albeit at the upper end. This confirms our assessment that the economy could see more near-term increases in select food prices, partly due to weather-related supply concerns,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said in a text message to reporters.
The central bank’s inflation forecast for July was 4.1 percent to 4.9 percent. The BSP cited the increasing food prices following typhoons that devastated the country late last year and earlier in 2014.
“The BSP will therefore more closely coordinate with other agencies of government towards developing solutions to these constraints,” Tetangco said.
“At the same time, BSP will continue to monitor developments and calibrate monetary policy, as needed, to help guide inflation expectations and address second round effects that may develop,” he continued.
“Even as we have already taken a series of policy actions to address liquidity growth and its attendant financial stability risks and to temper inflation expectations, we will not hesitate to use any of our tools to help guide markets to keep inflation within the target range over the policy horizon,” the BSP chief further said.
The BSP has forecast inflation to average 4.33 percent this year, above the midpoint of its three to five percent target range.
Last week, monetary authorities hiked key policy rates by 25 basis points each as a preemptive move to keep inflation in check, particularly for 2015. The central bank raised its forecast average for 2015 inflation to 3.72 percent, already nearing the upper end of the two to four percent goal for that year.
The next rate-setting meeting has been slated for Sept. 11.
The July inflation print brought the seven-month average to 4.3 percent, still within the BSP’s target.
Looking at inflation by region, the rate in the National Capital Region quickened to 3.9 percent in July from 3.6 percent in June. Areas outside the capital, meanwhile, saw inflation climb to 5.1 percent from 4.7 percent.
By commodity group, the food and non-alcoholic drinks index accelerated to 8.2 percent in July from 7.4 percent in June, while the housing, water, electricity, gas and other fuels index rose to 2.4 percent from 2.3 percent.
The health index also quickened to 3.2 percent from three percent, while the transport index climbed to 1.5 percent from 1.3 percent, reflecting the hike in jeepney fares in mid-June.
The country also saw the recreation and culture index grow faster at 1.3 percent in July from 1.2 percent in June, while the education index accelerated to 5.1 percent from five percent.
The faster rise in a number of indices was somewhat tempered by a deceleration in the alcoholic beverages and tobacco index to 3.5 percent from 3.7 percent and a slide in the clothing and footwear to 3.3 percent from 3.4 percent.
The communication index also fell to 0.0 percent from 0.1 percent, while the restaurant and miscellaneous goods and services index declined to 1.8 percent from 1.9 percent.
Only the furnishing and household equipment index remained steady in July at 2.6 percent.
Written by: Kathleen A. Martin