The Bangko Sentral ng Pilipinas (BSP) is more confident inflation will stay within the target band of two percent to four percent for the rest of the year after a “temporary uptick” in July.
In a statement Thursday, Sept. 5, following the government’s announcement of a 3.3 percent August inflation versus July’s above-target rate of 4.4 percent, the BSP said the latest inflation is within its forecast range of 3.2 to four percent.
“The latest inflation outturn is consistent with the BSP's latest assessment that inflation will revert back to the target range in August after the temporary uptick observed in July due to negative base effects and the easing of supply pressures for key food items, particularly rice,” said the BSP.
The central bank reiterated that the rice tariff reduction “will help in easing inflation in the coming months.”
Meanwhile, the BSP said the balance of risks to the inflation outlook is still inclined to the downside for this year and in 2025 while risks have “a slight tilt to the upside for 2026.”
“(The) downside risks are linked mainly to lower import tariffs on rice, while upside risks could come from higher electricity rates and external factors,” said the BSP.
The BSP again said that the Monetary Board will adopt “measured approach” in its monetary policy stance to endure “price stability (that is) conducive to balanced and sustainable growth of the economy and employment.”
Last August 15, despite the above-target July inflation, the BSP reduced its target reverse repurchase (RRP) or policy rate by 25 basis points (bps) to 6.25 percent. The last time the BSP cut the benchmark rate was on Nov. 19, 2020, also by 25 bps from 2.25 percent to two percent.
The data-dependent BSP said inflation is projected to continue with its downward path and return to within the government’s two-four percent target range despite the uptick in July.
The BSP currently has a risk-adjusted inflation forecasts for 2024 of 3.3 percent and 2.9 percent for 2025. For 2026, the forecast is 3.3 percent.