Headline inflation continued to fall in August, dropping to 0.1 percent year-on-year from 0.2 percent in July, the lowest in more than 22 years. This brings the year-to-date average down to 3.7 percent, well within the target range of 2.5-4.5 percent for 2009. Likewise, core inflation, which excludes specific food and energy items to measure generalized price pressures, was lower at 2.9 percent year-on-year in August from 3.6 percent in July. Month-on-month headline inflation was also lower at 0.2 percent in August compared to 0.3 percent in July.
Most major commodity groups registered either lower or negative inflation rates in August. Among food items, rice and corn inflation rates remained negative, while fruits and vegetables as well as meat registered lower inflation rates. Services inflation turned more negative, driven by transportation and communication services inflation. Light inflation was also more negative while fuel inflation remained negative.
Governor Amando M. Tetangco, Jr. noted that the inflation outturn was within the -0.3 percent to +0.6 percent forecast of the BSP for August. He added that base effects from record-high commodity prices last year continued to drive the inflation downtrend. He observed, however, that inflation could have already hit bottom in August and could pick up, but still within single-digit levels, in the coming months. He said the BSP will continue to monitor monetary developments to ensure that policy settings remain supportive of non-inflationary economic growth.