MANILA — Philippine inflation rose at the fastest pace in nearly four years in July, government data showed on Friday, keeping the central bank under pressure to further tighten monetary policy at its Aug. 18 meeting.
The Philippine Bureau of Statistics said the consumer price index rose 6.4 percent year-on-year in July, driven by higher transportation and food prices.
The headline, the highest since October 2018, was above the average of 6.2 percent forecast in a Reuters poll and at the high end of the central bank’s forecast range of 5.6 to 6.4 percent.
Inflation averaged 4.7 percent in January-July, while the central bank had a target range of 2 to 4 percent.
Bangkok Central ng Pilipinas (BSP) has hiked interest rates by a total of 125 basis points this year, including an off-cycle hike of 75 basis points last month, in a scuffle with peers around the world to curb inflation.
While GNP Governor Felipe Medla has ruled out another hike outside of the regular policy review program, at a meeting later this month he hinted at the possibility of another hike of 25 basis points or 50 basis points.
Following the release of the data, it said: “BSP stands ready to take all necessary policy measures to bring inflation back on target over the medium term.”
BSP expects average inflation in 2022 to be 5 percent, well above its target, on continued supply-side pressures. For 2023, however, inflation is expected to fall within the 2-4 percent target range.
Medla also said the BSP is ready to address inflation risks from the weaker peso, which has stabilized following the central bank’s recent push.
Analysts said the peso was vulnerable to depreciation amid the Philippines’ current account deficit and the possibility of further tightening by the US Federal Reserve.
Policy decisions after the Aug. 18 meeting will depend on the data, Medla said.
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