Headline inflation continued to fall in July, dropping to 0.2 percent year-on-year from 1.5 percent in June, the lowest since March 1987. This brings the year-to-date average down to 4.3 percent and within the target range for 2009. Likewise, core inflation, which excludes specific food and energy items to measure generalized price pressures, was lower at 3.6 percent year-on-year in July from 3.9 percent in June. Month-on-month headline inflation was also lower at 0.3 percent in July compared to 0.6 percent in June.
As in the previous month, all major commodity groups registered either lower or negative inflation rates in July. Lower food inflation continued to account for the bulk of the decline in headline inflation, with negative inflation for rice and corn and lower inflation year-on-year for fruits and vegetables, cereal products, and miscellaneous food. Services inflation turned more negative as transportation and communication services inflation went in the same direction in July. In addition, rentals inflation was lower, and fuel and light inflation rates were negative.
BSP Officer-in-Charge Nestor A. Espenilla, Jr. noted that the inflation outturn was within the -0.3 percent to +0.6 percent forecast of the BSP for July. He added, however, that the downward trajectory of inflation-driven primarily by base effects due to record-high prices of commodities last year and relatively subdued demand-may have reached its trough in July, with inflation expected to increase gradually during the remaining months of this year and the next, but to remain within target range. He said the BSP will continue to monitor monetary conditions to ensure that monetary settings are appropriately calibrated to the inflation outlook and the requirements of the Philippine economy as it tracks a non-inflationary growth path.