Inflation cools to 6.1 percent in August

Inflation in the Philippines slowed to 6.1 percent in August, the lowest level in five months, according to the Philippine Statistics Authority. This decline was attributed to slower increases in food prices. The headline inflation, which measures the annual change in prices of goods and services typically purchased by Filipinos, fell from 6.2 percent in July to 6.1 percent in August.

While this represents a decrease from the previous month, it is still higher than the 1.5 percent inflation rate in August 2023. Inflation for food, which includes rice, decreased to 4.6 percent in August from 5.3 percent in July, mainly due to a drop in vegetable prices. However, rice inflation accelerated to 19.4 percent in August from 17.1 percent in July, the highest since July 2024.

Core inflation, which excludes food and energy items, eased to 4.1 percent in August from 4.2 percent in July. Overall inflation for the period from January to August averaged 5.2 percent, surpassing the government's target of 2 to 4 percent for the year. Department of Economy and Planning Secretary Arsenio Balisacan expressed optimism about the moderation in key inflation drivers, such as food prices, but cautioned that recent heavy rains and flooding may impact inflation in the future.

The Bangko Sentral ng Pilipinas (BSP) stated that it would continue to monitor the impact of Middle East developments and weather-related disturbances on inflation. In addition to inflation, the BSP expects to raise the benchmark interest rate by an additional 25 basis points in the fourth quarter. The government is implementing interventions under the UPLIFT program to manage price pressures and support vulnerable sectors, such as expanding access to affordable food, distributing free rice, and providing fuel assistance.