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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest inflation figures in the Philippines.

Key Quotes

“Headline inflation unexpectedly edged up to 2.7% y/y in Jul (from 2.5% y/y in Jun), bringing yearto-date (YTD) inflation to 2.5% in the first seven months of 2020 (Jan-Jul 2019: 3.2%)… July’s inflation was largely due to costlier fuel, transport services, housing rental, alcoholic beverages, and tobacco, which fully offset the moderation in food price inflation and electricity rates amid a stronger peso (PHP).”

“Despite the uptrend in inflation, expectations of subdued domestic demand due to high unemployment, falling overseas remittances, and return to a lockdown in and around capital Manila for 15 days from 4 Aug following the spike in new COVID-19 cases underpins a benign inflation environment for the rest of the year and into 2021. Steady global oil prices at around USD40 /bbl and firm PHP also ensures manageable inflationary pressures ahead. We maintain our full-year inflation forecasts at 2.5% for both 2020 and 2021.”