Inflation Update: Price rise hits near six-year low 

Consumer prices in the Philippines rose 0.9% year-on-year (YoY) in July, the slowest since October 2019, according to the statistics authority.

Still subdued inflation provides enough wiggle room for monetary authorities to cut interest rates to support economic growth amid global uncertainty.

Key points  

• For January to July, headline inflation averaged 1.7% YoY. That’s still below the government’s 2%-3% target for the year.
• The main drivers to the downtrend in headline inflation are the slower increase in power rates and the sustained deflation in rice prices.
• Core inflation, which strips out volatile food and energy costs, quickened to 2.3% YoY.

Moving forward  

• Metrobank estimates inflation to average 2% this year.
• We forecast another cumulative 50 basis points (bps) worth of policy rate cuts from the Bangko Sentral ng Pilipinas this year.

ECONOMIC UPDATES    

Inflation Update: BSP’s low-inflation safety net

Below-target inflation keeps the door open for the BSP to cut rates further this year

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