MANILA: Consumer price inflation in the Philippines rose during the month of August, despite easing in annual gains of food and non-alcoholic beverages. However, the headline inflation is still expected to average out by end of 2016, before possibly rising next year.
The Philippines’ consumer prices rose 1.8 percent y/y in August. Annual gains in food and non-alcoholic prices slowed down. As expected, the sub-indices for utilities and transport posted monthly contractions. Over the month, the supply of electricity improved as reflected by the decline in the Wholesale Electricity Spot Market (WESM). Core inflation maintained its slow rise to 2.0 percent y/y.
“We still expect headline inflation to average 1.9 percent in 2016 before rising to 3.0 percent in 2017,” ANZ said in its latest research report.
The Bangko Sentral ng Pilipinas (BSP) most recently cut its 2016 and 2017 inflation forecasts to 1.8 percent and 2.9 percent, from 2.0 percent and 3.1 percent respectively). The BSP estimates that the planned increase in excise taxes in oil of PHP6/litre is likely to raise average 12-month inflation by 0.6ppt. Diesel and other types of fuel are currently exempted from excise tax.
