Philippines: Inflation drops a notch in July
August 5, 2011
In July, consumer prices added 0.08% over the previous month, following the 0.48% increase observed in June, according to the new 2006-based CPI series. The result mainly reflected a subdued increase in food prices (July: +0.15% month-on-month; June: +0.22% mom), the CPI's largest component, as well as a decline in prices in the housing, water, electricity and gas category (July: -0.25% mom). Annual headline inflation inched down from 5.2% in June to 5.1% in July, which was a notch above market expectations of 5.0%. Meanwhile, annual core inflation, which excludes the price volatility associated with items such as oil and food, fell from 4.0% in June to 3.7% in July. Annual average inflation, which is the reference rate used by the Central Bank to conduct monetary policy, rose from 4.2% in June to 4.4% in July. Currently, annual average inflation lies within the 1% tolerance margin around the 4.0% target rate set by the Bank for 2011. On 28 July, before the release of the latest CPI figure, the Central Bank left the benchmark interest rate unchanged at 4.50% for a second consecutive month.