Inflation drops to near six-year low in July

Latest reading: Inflation eased to 0.9% in July, following June’s 1.4% and marking the lowest inflation rate since October 2019. As such, price pressures remained below the Central Bank’s 2.0–4.0% target range for the fifth consecutive month and surprised markets on the downside. Looking at the details of the release, prices for food and non-alcoholic beverages plunged for the first time since 2019, transport costs fell at a sharper rate than in the prior month, and price growth for housing and utilities softened from June. Annual average inflation fell to 2.1% in July (June: 2.3%). Lastly, consumer prices increased a seasonally adjusted 0.08% in July over the previous month, largely in line with the 0.06% increase logged in June.

Panelist insight: Nomura’s Euben Paracuelles and Nabila Amani commented: “We maintain our forecast for CPI inflation to average 1.8% in 2025, penciling in a gradual climb towards 2% by year-end, in part due to low base effects and the impact of weather disruptions that are still likely to materialize in the near term. Still, our full-year forecast remains below BSP’s 2-4% target, reflecting a combination of factors, including a still-negative output gap and an economy facing downside risks. This implies pass-through effects from easing supply-side drivers are likely to accentuate the impact; we still see low crude oil prices and the government maintaining supply-side measures to keep food prices, particularly rice prices, low.”

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