Year-on-year inflation in August rose to 4.6 percent from 4.3 percent in July, bringing the average inflation rate for the first eight months of the year to 3.7 percent. This rate continues to be well below the government’s inflation target range of 5.0-6.0 percent for 2000 and the IMF program level of 6.2 percent in August. The august actual inflation rate was within the BSP’s internal inflation forecast range of 4.3-4.8 percent for the same month.
The higher inflation rate for august was due mainly to increases in the average prices of food, beverage and tobacco (FBT) as well as services. The inflation rate of FBT inched up from 2.3 percent in July to 2.7 percent in August; services from 10.9 percent to 11.6 percent; fuel light and water (FLW) from 10.3 percent to 12.0 percent; and miscellaneous items from 2.5 percent to 2.6 percent. The higher FBT inflation emanated from faster rates of price increases of all food items, except corn and fruits as well as vegetables. By contrast, the inflation rate for housing and repairs (H&R) fell from 4.3 percent in July to 3.9 percent in August while clothing remained steady from its July level of 2.3 percent.
Likewise, the higher month-on-month inflation in FBT and FLW resulted to a 0.7 percent increase in inflation for the month of August. The month-on-month inflation rate of FBT rose from 0.4 percent in July to 0.8 percent in August, while FLW accelerated from 1.1 percent to 2.1 percent. Other items that exhibited higher inflation were clothing (from 0.1 percent to 0.2 percent) and miscellaneous items (from 0.1 percent to 0.3 percent). On the other hand, the inflation rates of services and H&R fell from 1.0 percent and 0.2 percent in July to 0.9 percent and 0.1 percent, respectively, in August.
The relatively moderate price movements in the first eight months of this year is expected to boost confidence in the attainment of the government’s target inflation range of 5.0-6.0 percent for 2000 and provides monetary authorities with greater flexibility in the conduct of monetary management. The BSP remains firmly committed to maintaining price stability in the context of a broadly stable exchange rate while maintaining the necessary in the conduct of monetary policy to accommodate a broad-based economic growth.