Annual inflation in the Philippines slows to 3.3% in August

MANILA: Annual inflation in the Philippines fell to a seven-month low in August as price increases in food and transportation costs moderated, the statistics agency said on Thursday, giving the central bank room to cut interest rates further.

The consumer price index (CPI) rose 3.3 percent in August compared to the same period last year, below the 4.4 percent increase in the previous month. This brought average inflation in the first eight months of the year to 3.6 percent, well within the central bank's comfort range of 2 to 4 percent.

Inflation last month was the lowest since January (2.8 percent).

Economists expected inflation of 3.6 percent in a Reuters poll.

The core inflation rate, which excludes volatile food and energy prices, also slowed to 2.6 percent last month.

Rice inflation, which accounts for nearly a tenth of overall inflation, fell to 14.7 percent, the lowest since October 2023. Rice prices could fall further in the coming months, national statistician Dennis Mapa said in a briefing.

“It will continue to decline to single digits due to base effects,” Mapa said.

Philippine President Ferdinand Marcos Jr. reduced tariffs on rice from 35 to 15 percent, but the expected price decline was slower than expected.

The Philippine central bank said on Thursday that lower rice tariffs would help moderate inflation in the coming months, adding that inflation risks remain tilted to the downside this year and next, with a “slight upward bias” for 2026.

“The Monetary Committee will continue to pursue a measured approach to ensuring price stability,” said a statement from the Bangko Sentral ng Pilipinas (BSP).

Nicholas Mapa, an economist at Metropolitan Bank and Trust Co., said the central bank's August figures could allow for a further cut in interest rates.

The door for further cuts this year “remains wide open,” Mapa said on social media.

The BSP cut its key interest rate by 25 basis points to 6.25 percent in August, the first rate cut since November 2020.

BSP Governor Eli Remolona indicated that there was room for another interest rate cut this year.