UPDATE 1-Philippines July annual inflation slows to 2-yr low

* July CPI lowest in two years
* Slower inflation on lower food, fuel costs
* July CPI supports policy rate cut views

By Karen Lema and Neil Jerome Morales
MANILA, Aug 6 (Reuters) - Philippines annual inflation
slowed for a second straight month in July on lower food and
fuel prices, the country's statistics agency said on Tuesday,
reinforcing expectations that the central bank will resume
cutting interest rates this week.
The consumer price index rose 2.4% in July from a year
earlier, matching the median forecast in a Reuters poll, and
within the central bank's 2.0%-2.8% projection for July.
Last month's inflation figure, which was the slowest in two
years, confirmed consumer prices are back on a downward path
after a surprise uptick in May, giving the central bank room to
ease monetary policy.
Core inflation, which strips out volatile food and fuel
items, also eased slightly to 3.2% in July from 3.3% in June.
Slowing inflation has allowed the country's central bank to
start unwinding last year's interest rate hikes which totalled
175 basis points, with a 25 basis points cut in its benchmark
interest rate PHCBIR=ECI in May.
"With new data evidencing a continued trend of slowing
inflation in the Philippines and the U.S. Federal Reserve
cutting rates ... it is widely expected by the market that the
Philippines central bank will be cutting rates this Thursday,"
ING Bank economist Nicholas Mapa said.
All 10 economists in a Reuters poll expect the central bank
to resume lowering rates after a pause in June, with all of them
pencilling in a quarter-point cut on Thursday to support
economic growth. L4N24Y0Z6
The same poll came up with a median forecast of 5.9% for
second quarter growth, faster than the previous quarter's 5.6%
expansion, but below the government's 6%-7% target for the year.

(Editing by Shounak Dasgupta)