Optimism rises as RP inflation steadies

Optimism rises as RP inflation steadies

MANILA (AFP): The Philippine consumer price index was
unchanged from the previous month at 5.7 percent in July,
boosting government confidence that inflation could go down
further as economic growth speeds up, officials said over the
weekend.

The July figure brought the average inflation rate in the
first seven months of the year to eight percent, the National
Statistics Office said in a statement.

Month-on-month inflation hit 0.2 percent in July from a
revised rate of 0.8 percent in June, the office added.

The Central Bank of the Philippines said the July rate was
well within the 7.8-percent ceiling set under a prevailing
standby program with the International Monetary Fund (IMF).
It credited the steady inflation rate to stable food prices,
remarking that the year-on-year consumer price index for food,
beverages and tobacco, housing and repairs, clothing and
miscellaneous items went down in July.

However the central bank admitted the rate for services and
fuel, light and water went up.

The central bank said the stable inflation rate would increase
flexibility in conducting monetary policy "to achieve the goal of
reducing inflation while maintaining the broad stability of the
peso."

Additionally, the decline in interest rates and the slowdown
in inflation are expected to boost business confidence further,
hopefully leading to more lending by the banking system, the
central bank said.

Analysts said the inflation figures for July were within
expectations.

"It wasn't disappointing (but) we were not (pleasantly)
surprised with it," said April Lee of Citisecurities Inc.
"As long as it is below six percent, it is okay," Lee said.

But she warned that recent widespread flooding in and around
Metropolitan Manila could push up inflation in the coming months
if it hurts agricultural production -- a major factor in the
inflation rate.

Other analysts said the inflation rate may remain unchanged
this month but could go up slightly in August if the floods
hamper the distribution of agricultural products in the capital.
However central bank governor Rafael Buenaventura said that
despite the concerns over the floods, "I'm confident we can keep
(within) our macroeconomic targets, including inflation."

Days of monsoon rains left widespread floods in Metropolitan
Manila and nearby provinces although the water in many areas has
since receded.

The year-on-year inflation rate for the highly-urbanized
capital of Metropolitan Manila rose from 3.9 percent in June to
4.3 percent in July while the rate in the largely-rural areas
outside the capital went down to 6.2 percent from 6.4 percent the
previous month.