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Philippines Inflation July 2023

Philippines: Inflation declines to lowest level since March 2022 in July

Inflation came in at 4.7% in July, down from June’s 5.4%. July’s reading represented the lowest inflation rate since March 2022. The result was driven by moderating price pressures for food and non-alcoholic beverages and easing price pressures for housing and utilities. Moreover, prices for transport dropped.

Accordingly, annual average inflation ticked down to 7.0% in July (June: 7.2%).

Finally, consumer prices dropped a seasonally adjusted 0.02% in July over the previous month, swinging from the 0.08% increase seen in June. July’s result marked the weakest reading since April.

Euben Paracuelles, analyst at Nomura, commented on the outlook:

“Overall, we maintain our 2023 headline inflation forecast at 5.3%, still above the 2-4% target of the Bangko Sentral ng Pilipinas (BSP). The trajectory of our forecast nonetheless implies that headline inflation will fall back to within BSP’s target by September, helped by base effects and less sticky core inflation. Still, we acknowledge upside risks, particularly from food inflation, given rising international food prices and the prospect of a delayed impact from the typhoon in late July. Further out, El Niño – which the authorities expect to materialize in late 2023 or early 2024 – remains a key risk to watch.”

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