Inflation in July could accelerate to as high as 6.6%, driven by higher fuel prices, increased electricity rates, rising fish prices, and the continued depreciation of the peso against the US dollar, according to the Bangko Sentral ng Pilipinas (BSP).
In its latest month-ahead inflation forecast, the central bank said that July inflation is expected to settle within the 5.6% to 6.6% range. The estimate is slightly higher than the 6.4% inflation rate recorded in June.
The BSP said higher domestic petroleum prices, electricity costs, and the weakening of the local currency contributed to the upward pressure on prices.
"Upside price pressures during the month could stem from elevated domestic petroleum pump prices, higher electricity rates, increasing fish prices, and the depreciation of the peso against the strengthening US dollar," the central bank said in a statement.
Data from the Department of Energy (DOE) showed that year-to-date fuel price adjustments reached a net increase of ₱56.72 per liter for gasoline, ₱57.75 per liter for diesel, and ₱52.61 per liter for kerosene.
Meanwhile, Manila Electric Co. (Meralco) increased electricity rates by ₱0.3428 per kilowatt-hour (kWh) in July, bringing the overall rate for a typical household to ₱14.8261 per kWh, up from ₱14.4833 per kWh in June.
The peso also remained under pressure throughout July, trading above the ₱61-to-$1 level. On July 24, the local currency fell to a record low of ₱61.847 against the US dollar before closing at ₱61.56 on July 30.
Despite the anticipated increase in inflation, the BSP said lower prices of essential commodities, including rice, meat, vegetables, and fruits, could help temper the rise in consumer prices.
"The BSP will remain vigilant and guided by incoming data, particularly on inflation and growth prospects. It will continue to monitor recent developments in the Middle East for their impact on inflation and economic activity," the central bank said.
The Philippine Statistics Authority (PSA) is expected to release the official July inflation data in the coming days.
