HIGHER oil and electricity costs as well as rising rice prices likely drove inflation faster in August, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

In a statement, the BSP’s Department of Economic Research gave a 2.6-3.4% estimate range for the month, assuring that the monthly inflation rate would remain within the central bank’s 2-4% target band for the 12th straight month.

Prices of widely used goods and services increased by 2.8% overall in July, inching up from the downward-revised 2.7% in June and 1.9% logged a year ago.

July took the year-to-date pace to 3.1%, a tad below the central bank’s own 3.2% full-year 2017 forecast average.

BSP’s estimate range for August surpasses the year-ago 1.8%. The lower end would result in a 3.0% eight-month average, while the top end would yield 3.1% for the same period.

The Philippine Statistics Authority (PSA) is scheduled to report official August inflation data on Tuesday.

“Increases in domestic petroleum prices, electricity rates in Meralco-serviced areas and rice prices along with the depreciation of the peso could contribute to upward price pressures for the month,” the central bank unit said in a statement.

Retail pump prices went up during the month, mirroring higher rates at the global crude market. As of Aug. 15, year-to-date fuel price increases amounted to P2.24 per liter for gasoline, P1.60/liter for diesel, and P2.94 per kilogram for liquefied petroleum gas.

On the other hand, power distributor Manila Electric Co. (Meralco) announced that utility rates will increase by 13 centavos per kilowatt-hour for August due mainly to higher cost of power purchased from suppliers.

PSA data also show year-on-year increases in retail prices of milled rice. Specifically, retail prices of well-milled rice rose 0.50%, 0.72% and 0.70% annually to P42.09 per kilogram (/kg), P42.19/kg and P42.18/kg in the first, second and third weeks of August, respectively. Retail prices of regular milled rice for the same corresponding weeks rose 1.53%, 1.72% and 1.59% to P37.91/kg, P37.99/kg and P38.00/kg, respectively.

Meanwhile, the peso traded at 11-year-lows that month, with its weakest showing at P51.49 to a dollar recorded on Aug. 18. However, central bank officials have said that the exchange rate pass-through to inflation has significantly gone down.

Traders have said that the Philippines’ vanishing current account surplus has significantly weighed on sentiment towards the local currency, adding to external developments and geopolitical tensions that turn investors away from emerging-market currencies like the peso.

The BSP said it will “continue to assess domestic and external factors” that could affect price dynamics, which in turn is expected to support overall economic growth. — Melissa Luz T. Lopez