MANILA, Philippines - Prices of goods and services decelerated to a near four-year low with inflation settling at 2.5 percent in July, the National Statistics Office (NSO) reported on Tuesday.
Inflation in July was slower than the previous month's 2.7 percent, and the slowest since the 2.3 percent recorded in September 2009.
Year-to-date, inflation settled at 2.9 percent, lower than the central bank's 3-5-percent target for 2013. Inflation a year ago was at 3.2 percent.
"The indices of alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; furnishing, household equipment and routine maintenance of the house; recreation and culture; and restaurant and miscellaneous goods and services recorded slower annual increases during the month," NSO said.
Inflation within the National Capital region dropped to 1 percent from June's 1.6 percent while other areas similarly slowed down to 2.9 percent from 3 percent.
Socioeconomic Planning Secretary Arsenio Balisacan said the slow uptick in prices was driven by lower inflation among food items.
“According to the Bureau of Agricultural Statistics (BAS), there were sharp reductions in the prices of vegetables in Metro Manila. These include ampalaya, sitao, cabbage, carrots, baguio beans and white potatoes, while tomatoes posted slower price increases in July 2013 compared to the previous month,†Balisacan said.
Data from BAS showed that the average price of ampalaya was cheaper by 10.5 percent, sitao by 2.7 percent, cabbage by 31.5 percent, carrots 21.4 percent, baguio beans by 23.6 percent, and white potato by 10.4 percent. On the other hand, inflation rate for tomato slowed down to 15.1 percent in July 2013 from 21.7 percent in June 2013, the National Economic and Development Authority noted.
For his part, Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco, Jr. said the lower inflation rate will allow more room for policy changes.
“...[T]his provides BSP room to make any further adjustments to policy stance if needed to address possible effects of changes in the growth trajectory of our main trading partners, including (United States), Japan and China, and shifts in investors sentiment that could adversely impact the prices of international commodities and capital flows,†Tetangco was quoted as saying by the Philippine News Agency.
The central bank has recently maintained its policy rates at 3.5 percent for overnight borrowing and 5.5 percent for overnight lending.