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UPDATE 1-Philippines inflation slows to near 2-year low in June

Published 07/05/2019, 09:52 AM
Updated 07/05/2019, 10:00 AM
UPDATE 1-Philippines inflation slows to near 2-year low in June

* CPI rises 2.7% y/y in June vs. 2.9% expectation
* Food, fuel costs rise at slower pace
* Economists expect 25 bps rate cut in Aug

MANILA, July 5 (Reuters) - Philippine annual inflation eased
more than expected in June as food and fuel costs increased at a
slower pace, the statistics agency said on Friday, supporting
views that the central bank would cut rates at its policy
meeting in August.
The consumer price index rose 2.7% year-on-year in June,
below the 2.9% increase forecast in a Reuters poll, and it was
the lowest since August 2017 when it hit 2.6%.
This was also the first time since December 2017 that
inflation eased below the midpoint of the central bank's 2%-4%
target this year.
The latest data could reinforce market expectations that
there would be more monetary easing this year after the central
bank cut interest rates PHCBIR=ECI for the first time since
2012 in May, by 25 basis points (bps) to 4.5%.
Michael Ricafort, an economist at Rizal Commercial Banking
Corp, said it was possible that the central bank would resume
cutting interest rates after it kept them steady last month. He
expects a 25 basis point cut at the Aug. 8 policy meeting
because of the slower-than-expected inflation in June.
Major central banks around the world have started to cut
rates in the face of rising economic risks as an escalating
U.S.-China trade standoff pressures global growth and
manufacturing output.
Philippine central bank Governor Benjamin Diokno said on
Thursday he expected growth to hit at least the bottom end of
the government's 6%-7% growth goal this year. The economy grew
6.2% in 2018, below target, as inflation crimped domestic
demand.
To rein in red-hot inflation last year, the central bank had
raised its key policy rate by a total 175 bps.

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