The Bangko Sentral ng Pilipinas said inflation in August likely picked up to as high as 3.3 percent from 2.7 percent in July on the back of higher fuel prices.
The BSP Department of Economic Research said in a statement the August inflation might have settled within a range of 2.5 percent to 3.3 percent.
“Higher domestic prices of gasoline and LPG [liquefied petroleum gas] provide upward price pressure during the month,” the DER said.
“These could be offset in part by the continued decline in Meralco power rates and the sustained appreciation of the peso along with broadly stable food prices,” it said.
BSP Governor Benjamin Diokno on Thursday said the strong peso helped stabilize inflation this year. The peso remains among the best-performing currencies in the Asian region amid the onslaught of the COVID-19 pandemic.
Diokno said the local currency appreciated against the US dollar by 4.2 percent as of Aug. 19 relative to its end-December 2019 level. It also performed better than other Asian currencies such as the Chinese yuan, Taiwanese dollar and the Japanese yen.
The benign inflation environment prompted the Monetary Board on Aug. 20 to maintain the record-low benchmark interest rates at 2.25 percent.
Diokno said that while the latest baseline forecasts rose slightly on higher-than-expected inflation in July (2.7 percent) and recent increases in global crude oil prices, the future inflation path remained firmly within the target range of 2 percent to 4 percent.
The board also revised the inflation forecasts made during the previous meeting for 2020, 2021 and 2020. For 2020, the inflation forecast was revised upwards to 2.6 percent from 2.3 percent while for 2021, it was raised to 3 percent from 2.6 percent. For 2021; the forecast was adjusted to 3.1 percent from 3 percent.