Philippines: July 2024 inflation seen to hit 4% to 4.8%

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Inflation in July is projected to surpass the government's target range, increasing up to 4.0% to 4.8%, according to the Banko Sentral ng Pilipinas (BSP) on Wednesday.

President Ferdinand Marcos Jr.'s administration has a target inflation rate of 2% to 4% during his term.

'The BSP projects July 2024 inflation to settle within the range of 4.0 to 4.8 percent. Higher electricity rates along with the increased prices for agricultural commodities like vegetables, meat, and fruits along with higher domestic oil prices are the primary sources of upward price pressures for the month,' the BSP said in a statement.

The Philippine Statistics Authority recorded June's headline inflation at 3.7%, which fell into the BSP's June estimate of 3.4% to 4.3%

In a previous statement, the BSP had already foreseen a spike in July inflation, but said it would ease again in August.

'While inflation is projected to settle above the target range in July due to positive base effects, inflation is expected to return within the target range beginning in August,' the BSP said.

The BSP also noted that these numbers are offset by lower prices of rice and fruit, as well as a peso appreciation.

Rice is one of the largest contributors to food inflation, coming in at 22.5% in June. This is a decrease compared to 23% in May.

June's headline inflation was mainly driven by food and non-alcoholic beverages (61.9%), restaurants and accommodation services (13.2%) and transport (7.5%).

BSP Gov. Eli Remolona Jr. had previously stated that inflation would peak in July before returning within the government's target.

Highlights from the Monetary Board's meeting on June 27 said that inflation should remain within the government's target range for the next two years. A BSP survey of external forecasters found that the mean inflation for June 2025 could reach 3.4% and June 2026 could have 3.5%.