The headline inflation in July of 3.9 percent was unchanged from the previous month’s inflation rate. The resulting year-to-date average of 4.2 percent remained well within the Government’s target range of 3.5-5.5 percent for 2010. Month-on-month headline inflation was also steady at 0.2 percent. Meanwhile, core inflation, which excludes certain food and energy items to measure broad-based price pressures, increased marginally to 3.9 percent year-on-year from 3.8 percent (revised) in the previous month.
July inflation held steady as lower non-food inflation was offset by marginally higher food inflation. The deceleration in fuel inflation, a result of lower LPG and kerosene prices in July, was responsible for bringing down non-food inflation. Meanwhile, food inflation inched up with higher sugar prices due to tight supply. Rice prices also increased slightly, particularly for well-milled rice, with the onset of the lean season.
Governor Amando M. Tetangco, Jr. noted that the July inflation reading was within the BSP’s forecast range for the month. He added that manageable inflation pressures and well-contained inflation expectations have provided the BSP with scope to keep interest rate policy levers unchanged. He emphasized, however, that while the inflation outlook remains favorable, the BSP will continue to keep a close watch on price pressures and adjust monetary policy settings as needed to ensure non-inflationary output growth.