â€œDownward pressure could come from the lower local pump prices and power rates for the month,â€ Mr. Tetangco said.
If realized, the lower end of the central bankâ€™s estimate would mark another record low for the increase in prices of widely used consumer goods based on 2006 prices.
The higher end, meanwhile, is slightly faster than the 1.2% pace seen last month.
â€œThe BSP will continue to monitor domestic and global developments to ensure that the policy stance remains supportive of price stability conducive to a balanced and sustainable economic growth,â€ Mr. Tetangco said.
Inflation in June brought the average rate last semester to 2%. The Monetary Board last June 25 cut its inflation forecasts this year and next to 2.1% from 2.3% and to 2.5% from 2.6%, respectively, within a 2%-4% inflation target for both years.
The Monetary Board last June 25 also kept policy rates unchanged for the sixth time in a row given well-anchored inflation expectations and strong domestic demand. Overnight borrowing and lending rates remained at 4.0% and 6.0%, respectively, special deposit account rates at 2.50%, while banksâ€™ reserve requirement ratios were left unchanged.
Policy rates will be up for review when the Monetary Board meets for the fifth time this year on Aug. 13.
An economist said the market can expect the BSP to keep rates steady next month.
â€œThe BSP can possibly afford to keep interest rates on hold for the course of the year even if the Fed (Federal Reserve) begins its rate hike cycle, possibly in September,â€ Nicholas Antonio T. Mapa, Bank of the Philippine Islands Research Officer for Market Research and Strategy, said via e-mail.
â€œOf course, the BSP remains flexible to adjust monetary policy in the future, if conditions warrant. Just like the Fed, [Mr.] Tetangco knows any good monetary policy is crafted based on latest economic data,â€ he added.
â€œBut one thing we can be certain of is that these adjustments will be communicated effectively to the market when the BSP will indeed need to adjust monetary policy.â€
Manila Electric Co. (Meralco) said this month overall power rates will go down by around P0.0225 per kilowatt-hour (/kWh) as the 0.20/kWh hike in generation charge was offset by the lower distribution tariff approved by the Energy Regulatory Commission (ERC).
ERC said it granted Meralcoâ€™s request to implement lower tariff on distribution, supply and metering, allowing the distributor to adopt an average rate of P1.3810/kWh starting this month, 11.26% lower than the current P1.5562/kWh and was likewise below the P1.3939/kWh proposed by Meralco in June.
Thus, households consuming an average of 200 kWh per month — which comprise around 75% of Meralcoâ€™s customer base — will pay P4.50 less. Those consuming 300 kWh, 400 kWh and 500 kWh will see P19, P42 and P89 bill reductions, respectively.
Oil firms have also slashed pump prices four times this month as of today. Gasoline prices went down by P2.05-P2.20 while diesel and kerosene prices were likewise reduced by P3.20-P3.25 and P2.90, respectively.
The Philippine Statistics Authority is scheduled to report official July inflation data on Aug. 5. — Mikhail Franz E. Flores