Headline inflation could settle within 2.6 to 3.4 percent this month as a result of higher fuel, power and rice prices in addition to the peso’s weakness, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
The rate picked up to 2.8 percent in July from June’s revised 2.7 percent. Inflation data for August is scheduled to be released on September 5.
“The BSP Department of Economic Research forecast suggests that August 2017 inflation could settle within the 2.6-percent to 3.4-percent range,” the central bank said, noting factors such as Manila Electric Co. (Meralco) rate hikes, higher pump prices and the peso’s depreciation.
Meralco has announced a rate increase of P0.1338 per kilowatt-hour for August and just this week, oil companies raised pump prices for gasoline, diesel and kerosene.
The peso, meanwhile, has fallen to P51 per dollar territory as the prospect of war on the Korean peninsula spooked investors.
The currency lost 4 centavos on Thursday to close at P51.17:$1. Several analysts have said it could fall to P52:$1 before the end of the year.
“Moving forward, the BSP will continue to assess domestic and external factors that affect the balance of risks surrounding the inflation outlook in line with its mandate of delivering price stability conducive to a balanced and sustained economic growth,” the central bank said.
For 2017, the Bangko Sentral expects inflation to hit 3.2 percent, within the target of 2 percent to 4 percent.
The BSP said a survey of private economists led to a consensus forecast of 3.3 percent for the year, with respondents citing downward pressure from lower global oil prices, low electricity rates, and uncertainty over the global economic prospects.