A turnaround of the domestic inflation rate in July 2025 at 0.9 percent, the slowest since October 2019’s 0.6 percent, made monetary authorities’ projection of below-average inflation rate for this year firmer.

The latest inflation rate, as reported by the Philippine Statistics Authority Tuesday, is a reversal from the 1.4 percent uptick last June, and brought the seven-month average to 1.7 percent, below the government’s 2.4 percent.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the latest inflation figure is within its 0.5 to 1.3 percent forecast for July.

“Inflation is projected to average below the lower end of the target in 2025, primarily due to the continued easing of rice prices,” it said.

Rice price inflation has been on the downtrend since at least in August 2024, National Statistician Claire Dennis Mapa said in a briefing.

Aside from slower price increases in power rates and oil prices, PSA data show that rice inflation drove the annual slowdown in the food index last July after it registered a 15.9 percent decline from a 14.3 percent drop last June.

This, as the government increased rice importation and lowered tariffs to boost supply and address price upticks in the early part of last year, when rice prices were cited as among the reasons for the faster domestic inflation rate.

While inflation this year is seen to remain below-target, BSP forecasts an uptick to within-target levels for the next two years.

“Global economic activity is showing signs of deceleration, influenced by uncertainty over US trade policy and ongoing geopolitical conflict in the Middle East. These developments may contribute to slower domestic growth,” it said.

Amidst this, the BSP said “a more accommodative monetary policy stance remains warranted.”

This year alone, the central bank’s policy-making Monetary Board (MB) has reduced the BSP’s key rates by a total of 50 basis points as inflation continues to slow. Indications for more hikes have been hinted by BSP Governor Eli Remolona.

The statement said “emerging risks to inflation from rising geopolitical tensions and external policy uncertainty will require closer monitoring, alongside the continued assessment of the impact of prior monetary policy adjustments.”

“Going forward, the BSP will safeguard price stability while ensuring that monetary policy settings are conducive to sustainable economic growth and employment,” it added. (PNA)