Inflation accelerates to 4.9% in August, settles above target

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Metro Manila (CNN Philippines, September 7) — Prices of basic goods climbed at a faster pace in August with food and household commodity costs leading the rise, Philippine Statistics Authority (PSA) data released on Tuesday show.

Inflation stood at 4.9% during the month, announced Philippine Statistics Authority chief Dennis Mapa in a virtual briefing. This is compared to rates of 4% in July this year — the first time it fell within the Bangko Sentral ng Pilipinas' target 2-4% band for 2021 — and 2.4% in August last year.

The recent pace is the fastest since January 2019 where inflation stood at 4.4% after easing from 5.1% the month prior, PSA data revealed. August’s rate brings average inflation for the year so far to 4.4%.

The latest pace also dwells within the 4.1-4.9% range that the BSP pegged for the month.

“The latest outturn is consistent with the BSP’s assessment that inflation could settle close to the high end of the target range in the near term before decelerating back to within the target range by year end,” it said in a statement.

Food and non-alcoholic beverages saw inflation quicken in August to 6.5%, with meat, fish and vegetables driving the faster rate.

Housing, water, electricity, gas and other fuels also logged a quicker pace during the month at 3.1%, driven by LPG prices, electricity and rentals. Restaurant and miscellaneous goods likewise recorded a faster rate at 3.8%.

The BSP earlier said higher prices for LPG, Meralco electricity and key food items along with a weaker peso are the primary sources of upward price pressures for August.

Meanwhile, the National Capital Region saw inflation rise to 3.7% in August from 3.2% the month prior.

The pace for areas outside the capital region and the country’s bottom 30% income households also zoomed to 5.2% in August from the 4.3% and 4.4% rates logged in July, respectively.

The recent print brought average inflation for the country’s poorest families to 4.9% as of August.

Among regions, Cagayan Valley registered the fastest inflation this August at 7.5% from 6.9% in July. BARMM posted the slowest at 2.5% from 2% in the past month.

Inflation sped up among all regions except for MIMAROPA and Caraga, which saw it ease in August.

The central bank also noted an uptick in global commodity costs caused by bottlenecks in supply chains and recovery in demand “could lend upside pressures” on inflation.

Moreover, the rise of new coronavirus variants — resulting in stricter lockdowns and delays in the economy’s reopening — may present downside risks on both demand and inflation, it added.

“Looking ahead, the BSP stands ready to maintain its accommodative monetary stance for as long as necessary to support the economy’s sustained recovery to the extent that the inflation outlook would allow,” said the central bank.