Philippines July CPI rises but door open to further easing

Reuters

Published Aug 04, 2020 10:13PM ET

Updated Aug 05, 2020 02:15AM ET

MANILA (Reuters) - Philippine inflation accelerated for a second straight month in July as the easing of coronavirus lockdowns revived consumer demand, but price pressures remained subdued, giving the central bank room for further monetary policy easing if needed.

July's consumer price index rose 2.7% from a year earlier , the fastest in six months, driven by increases in transport, utility, alcoholic beverages and tobacco prices, the Philippine Statistics Authority said on Wednesday.

It was near the upper end of the central bank's 2.2% to 3.0% forecast range, and faster than the median 2.5% estimate in a Reuters' poll, which matched June's rate.

Core inflation, excluding volatile food and fuel prices, was 3.3%, versus 3.0% in June .

Tame inflation has allowed the central bank to cut interest rates by a total of 175 basis points this year to a record-low of 2.25% to help support a battered economy.

But a return to lockdown in and around Manila amid a spike in COVID-19 cases has dashed hopes for a swifter recovery. [nL4N2F52MR]

Bangko Sentral ng Pilipinas (BSP) will consider inflation and second-quarter GDP data at its Aug. 20 policy meeting.

"The BSP remains ready to deploy all available measures in its toolkit in fulfilment of its policy mandate as it continues to assess the impact of the global health crisis on the domestic economy," central bank governor Benjamin Diokno told reporters

Data on Thursday is likely to show a 9.0% GDP contraction in April-June, a Reuters poll showed, after a downwardly revised 0.7% drop in the first quarter from -0.2%.

Second-quarter farm output, which usually accounts for less than 10% of economic output, grew at an annual pace of 0.5%, while trade data for June showed slower contractions in export and imports.