MANILA (Reuters) – Philippine inflation accelerated for a second straight month in July as the easing of coronavirus lockdowns revived consumer demand, but price pressures remained subdued, giving the central bank room for further monetary policy easing if needed.
July’s consumer price index rose 2.7% from a year earlier <PHCPI=ECI>, the fastest in six months, driven by increases in transport, utility, alcoholic beverages and tobacco prices, the Philippine Statistics Authority said on Wednesday.
It was near the upper end of the central bank’s 2.2% to 3.0% forecast range, and faster than the median 2.5% estimate in a Reuters’ poll, which matched June’s rate.
Core inflation, excluding volatile food and fuel prices, was 3.3%, versus 3.0% in June <PHCPXY=ECI>.
Tame inflation has allowed the central bank to cut interest rates <PHCBIR=ECI> by a total of 175 basis points this year to a record-low of 2.25% to help support a battered economy.
But a return to lockdown in and around Manila amid a spike in COVID-19 cases has dashed hopes for a swifter recovery. [nL4N2F52MR]
Bangko Sentral ng Pilipinas (BSP) will consider inflation and second-quarter GDP data at its Aug. 20 policy meeting.
“The BSP remains ready to deploy all available measures in its toolkit in fulfilment of its policy mandate as it continues to assess the impact of the global health crisis on the domestic economy,” central bank governor Benjamin Diokno told reporters
Data on Thursday is likely to show a 9.0% GDP contraction in April-June, a Reuters poll showed, after a downwardly revised 0.7% drop in the first quarter from -0.2%.
Second-quarter farm output, which usually accounts for less than 10% of economic output, grew at an annual pace of 0.5%, while trade data for June showed slower contractions in export and imports.
“Any bigger contraction in Q2 GDP data may lead to further monetary easing measures especially by way of a cut in banks’ RRR (reserve requirement ratio),” said Michael Ricafort, economist at Rizal Commercial Banking Corp.
(Reporting by Neil Jerome Morales and Karen Lema; Editing by Ed Davies)
