Last month’s slight increase in core inflation is an indication that commodity prices may rise moderately in the next few months.
Department of Finance Undersecretary Gil Beltran, in a report submitted to Finance Secretary Carlos Dominguez III, said “the country’s low inflation regime will serve as a favorable environment for policymakers to further cultivate and sustain sound economic policies”.
The latest DOF economic bulletin showed that core inflation accelerated to its highest level this year at 2 percent in August after removing the impact of volatile food and fuel prices.
Beltran said, “Outlook for the immediate near-term may see modest uptick in inflation, as indicated by the rise in core inflation from 1.9 percent to 2.0 percent.”
In August, headline inflation unexpectedly slowed to 1.8 percent from the previous month’s 1.9 percent due to the decline in prices of non-alcoholic beverages and food, particularly corn, meat and vegetables.
“The lower-than-expected inflation rate is largely accounted for by the continued easing of food prices. While the DOF had expected food prices to rise by 2.7 percent, actual increase turned out to be 2.4 percent,” Beltran noted.
Meanwhile, headline inflation for the first eight months of the year averaged 1.45 percent. This was even lower than the lowest end of the government’s inflation target of 2 percent to 4 percent.