MANILA (UPDATE) -- Inflation further eased for a sixth consecutive month in July, the state statistics bureau said Friday.

The consumer price index rose 4.7 percent last month, which was slower than the 5.4 percent inflation rate reported in June, the Philippine Statistics Authority said.

This was also within the 4.1 to 4.9 percent forecast of the Bangko Sentral ng Pilipinas.

However, it was still above the 2 to 4 percent target range of economic managers.

National Statistician and Undersecretary Dennis Mapa said the main contributors to slowing down inflation were slower increases in the prices of housing, electricity, gas and other fuels.

Food price hikes also slowed down at 6.3 percent in July 2023 from 6.7 percent in the previous month, the PSA said.

“The third main source of deceleration was transport, recording a faster annual decrease of -4.7 percent during the month from -3.1 percent in June 2023.”

The average inflation rate from January to July 2023 stood at 6.8 percent.

In June, economic managers revised their inflation forecast for 2023 to between 5 and 6 percent, which was lower than the 5 to 7 percent assumption they gave in April.

Inflation has been easing since hitting a 14-year high of 8.7 percent in January.

Mapa said core inflation, which strips out volatile food and fuel items, also slowed to to 6.7 percent in July from 7.4 percent in June.

“This brings the average core inflation from January to July 2023 to 7.6 percent’” the PSA said.

In July 2022, core inflation was observed at 3.9 percent, it added.

Mapa said they will continue to monitor the impact of typhoon Egay on prices in the country.

• Egay death toll climbs to 16; damage pegged at P5.9 billion

"Normally naman, meron tayong impact kaagad doon sa vegetables for example, ano. So nakita naman natin, may pagtaas na yung ating vegetables. So normally, yun ang unang tumataas," he said.

"But we will see kasi you will notice, medyo dynamic yung ating movement ng 13 commodity groups."

For his part, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the Philippines must be vigilant about price increases, as more weather disturbances may hit the country.

He also noted that oil price hikes and trade restrictions on food may drive a spike in commodity prices.

“The government will implement necessary measures to prevent price spikes, protect the purchasing power of Filipino families, and sustain our economic recovery and momentum,” he stressed.

The economic manager earlier said he was confident that the government would hit the 2 to 4 percent target for inflation by the end of this year, despite the damage caused by typhoon Egay to the country's agriculture sector.

• Balisacan: PH could meet 6 pct growth target despite slowdown among trade partners

The Bangko Sentral ng Pilipinas, meanwhile, said they remain ready to adjust the monetary policy stance as necessary to ease price pressures.

The BSP said balance of risks to the inflation outlook continues to lean towards the upside amid higher transport costs and minimum wage adjustments, food supply constraints, the El Niño, and the possible effects of higher toll fees on agricultural prices.

Easing inflation has allowed the BSP to pause rate hikes during its last policy-setting meeting.

Finance Secretary Benjamin Diokno has said he is bullish about Philippine inflation, noting that it could fall below 2 percent by the first quarter of 2024.

• Philippine inflation could fall below 2 pct by 2024: Diokno

But Aris Dacanay, ASEAN economist for HSBC Global Research, said inflation may turn the corner in January 2024 when Executive Order 10 expires.

The said order mandated lower tariffs for rice, corn, coal, and poultry, making importation more affordable.

"We actually estimate inflation to add 1.4 percentage point to inflation. So we do think, from below 35 in January of 2024, we do think that it will rise but not breach, the BSP target band of 4 percent but might be just in tangent to that level," he said.

Dacanay said it would be good if the BSP kept policy rates steady.

"Even though inflation is easing, and easing back to the BSP’s target, we do think the Bangko Sentral ng Pilipinas will need to keep rates steady and only cut after the Fed cuts its own policy rate, mainly because we do have a wide current account deficit as we continue our very much needed and ambitious infrastructure agenda."

"We are importing a lot of steel, we are importing a lot of inputs," he said.

"If we do cut rates earlier than the Fed, there is the risk of the peso depreciating abruptly as we saw in October of last year, and this might cause a lot of disruption when capital does flow out of the country," he explained.