Philippine inflation slows to record 0.8% in July

[MANILA] Philippine inflation slowed to a record low of 0.8 per cent year-on-year in July on lower electricity, petrol and transportation costs, the government said on Wednesday.

The rate of inflation was within the central bank's forecast of 0.5 per cent to 1.3 per cent, but marked a steep fall from June's year-on-year rate of 1.2 per cent, according to the Philippine Statistics Authority (PSA).

Petrol, electricity and water prices decreased by 1.1 per cent last month while transportation prices declined 0.5 per cent. Inflation for food and non-alcoholic beverages slowed to 1.3 per cent, the PSA said.

The figures were released ahead of a central bank meeting on interest rates next week, with authorities under pressure to help spur slowing economic growth.

"We will see at our meeting next week if there is (a) need for any adjustments to our stance of policy," central bank governor Amando Tetangco said in a statement following the release of the inflation data.

Tetangco said average inflation for the full year would likely fall "close to the lower end" of the bank's 2.0 per cent to 4.0 per cent target.

"We will monitor developments, especially those from external sources, that may raise volatility in financial markets or impact on inflation expectations," he said.

The monetary authority has kept its benchmark overnight borrowing and lending rates at 4.0 per cent and 6.0 per cent respectively since last year.

Year-on-year economic growth slowed to a three-year low of 5.2 per cent in the first quarter of this year due to lethargic government spending and weak exports.

It was the worst expansion for what has recently been one of Asia's fastest-growing economies since the last quarter of 2011, when it grew by 3.8 per cent.

The slowdown also imperilled the government's 7.0 per cent to 8.0 per cent growth target for the year.

AFP