Headline inflation increased to 3.2 percent year-on-year in July from 2.8 percent in June, within the BSP’s forecast of 2.6-3.5 percent for the month. The resulting year-to-date average of 3.1 percent remained at the low end of the Government's inflation target range of 3-5 percent for 2012. Likewise, core inflation, which excludes certain food and energy items to measure generalized price pressures, was higher at 4.1 percent compared with 3.7 percent in the previous month.
The higher inflation for July was traced mainly to higher prices of domestic petroleum products along with the upward adjustments in electricity charges. Likewise, food inflation rose slightly as inflation for bread and cereals went up. Owing to the onset of the rainy season, fruits and vegetables posted higher prices, which also contributed to increased food inflation.
Governor Amando M. Tetangco, Jr. noted that the latest inflation reading continues to be consistent with the BSP’s assessment of a manageable inflation environment over the policy horizon, with average inflation likely to remain well within the 3-5 percent target range. He stressed that the BSP will continue to keep a close watch on the evolving balance of risks to inflation to ensure that monetary policy remains supportive of sustained non-inflationary economic growth.