Headline inflation in August likely inched up to 2 percent, driven by higher prices of alcoholic drinks, tobacco products and transport costs, at a rate seen by the Department of Finance as still benign enough to allow for monetary policy maneuvering in support of economic growth.
Inflation probably clocked higher than the 1.9 percent price recorded in July and from 0.6 percent in August last year, the DOF said in its latest Economic Bulletin.
“The benign inflation outlook for the rest of the year will give macroeconomic policy makers room for maneuver in responding to external shocks and enable them to support robust growth for the rest of the year,” Finance Undersecretary Gil Beltran said in a report to Finance Secretary Carlos Dominguez 3rd on Friday.
Earlier, the Bangko Sentral ng Pilipinas (BSP) estimated inflation in August settling between 1.6 percent and 2.4 percent last month.
The Philippine Statistics Authority is scheduled to release the August 2016 inflation data on Tuesday.
The DOF’s inflation forecast is at the lower end of the BSP’s target range of 2 percent to 4 percent for the year.
The DOF official said prices of alcoholic beverages and tobacco products may rise to 6.4 percent in August from 5.8 percent in July; transport costs could reverse from -0.1 percent to 0.3 percent; and housing, utilities and fuels could rise from -0.2 percent to 0.1 percent.
Beltran noted the manageable uptick in consumer prices will continue to boost domestic demand and counterbalance the weaker global growth outlook.
Headline inflation is expected to remain benign in the near future and help further boost the economy, he said.