Headline inflation fell further to 1.7 percent year-on-year in August 2019 from 2.4 percent in the previous month. The resulting year-to-date average inflation rate went down to 3.0 percent, which is at the midpoint of the Government’s target range of 3.0 percent ± 1.0 percentage point for the year. Core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—was also lower at 2.9 percent in August from 3.2 percent in July. Likewise, month-on-month seasonally-adjusted inflation eased to 0.1 percent in August from 0.2 percent in the previous month.
The slowdown in August inflation rate was traced mainly to lower food, electricity, and domestic petroleum prices. Inflation of most key food items, such as meat and fish, slowed down during the month, while year-on-year inflation rate for vegetables turned negative. Similarly, prices of rice, corn, as well as sugar, jam, honey, chocolate, and confectionery continued to decline relative to year-ago levels. At the same time, the downward adjustment in electricity rates due to the decrease in generation costs, as well as lower domestic prices of petroleum products contributed to the slowdown in non-food inflation during the month.
The latest inflation reading remains consistent with the BSP’s prevailing assessment of a benign inflation environment over the policy horizon, with average inflation likely to stay within the Government’s 2-4 percent target range for 2019 - 2021. The BSP will remain watchful over latest economic developments here and abroad to ensure that the monetary policy stance remains consistent with the BSP’s price stability objective while being supportive of economic growth.