Inflation Slows Down to 2.4 Percent in August 2020
Year-on-year headline inflation slowed down to 2.4 percent in August from 2.7 percent in the previous month and was below the BSP’s expected range of 2.5-3.3 percent for the month. The resulting year-to-date average inflation rate of 2.5 percent was within the Government’s target range of 3.0 percent ± 1.0 percentage point for the year. Core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—also eased to 3.1 percent year-on-year in August from 3.3 percent in July. Meanwhile, month-on-month seasonally-adjusted inflation dropped to -0.2 percent in August from 0.5 percent in the previous month.
Headline inflation slowed down as most key food items posted lower year-on-year inflation readings in August. Year-on-year inflation for meat, fruits, as well as milk, cheese, and eggs moderated while fish inflation eased further due to adequate domestic supply despite the lean fishing season. At the same time, year-on-year inflation rates for rice, corn, and vegetables were negative during the month, which also contributed to the slowdown. Meanwhile, year-on-year non-food inflation was steady in August compared to July.
The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation is expected to remain benign over the policy horizon with the balance of risks tilting toward the downside owing largely to weak domestic demand and potential disruptions to domestic and global economic activity amid the ongoing pandemic. Going forward, the BSP will continue to monitor emerging price developments to ensure price stability conducive to a balanced and sustainable economic growth.