MANILA (UPDATE) - Inflation in August slowed to 6.3 percent from 6.4 percent in July, data from the Philippine Statistics Authority released Tuesday showed.

August inflation is within the Bangko Sentral ng Pilipinas' forecast of 5.9 to 6.7 percent but still above the government target of 2 to 4 percent.

The decrease was attributed to the slower increase in prices for transport at 14.6 percent from 18.1 percent the previous month, and food and non-alcoholic beverages which declined to 6.3 percent from 6.9 percent, National Statistician Dennis Mapa said.

However, Mapa said there were recorded increases in other commodity products such as restaurants.

“Restaurants, outside the households tumataas na ito, marami kami nakikitang commodity items, commodity groups na tumaas,” Mapa said.

(We're seeing many commodity items, groups with increases)

Other major contributors to inflation for the month include alcoholic beverages and tobacco, housing, health, education services and personal care, data showed.

Education services inflation hit 8.1 percent in August from -0.1 percent in July, data showed, as face to face classes resumed.

Inflation in NCR reached 5.7 percent, slower than the national average, but 0.6 percent faster compared to July, data showed.

Mapa said it remains unclear whether the downward trend will continue. The PSA is continuously monitoring the peso and the global fuel prices that could have an impact on local transport inflation.

The BSP said the trend is indicative that inflation could remain above target for the year before decelerating back to 2 to 4 percent in 2023.

"Upside risks continue to dominate the inflation outlook in the near term due to the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, the sharp increase in the price of sugar, as well as pending petitions for transport fare increases.," BSP Gov. Felipe Medalla said.

The central bank has raised the benchmark interest rate by 50 basis points to 3.75 percent on Aug. 18 to tame inflation. Its next rate-setting meeting is set on Sept. 22.

Analysts however are expecting more rate hikes especially since the US Federal Reserve had also signaled further tightening in the coming months to arrest food prices.

The core inflation, which is now at 4.6 percent, as well as the peso that reached an all-time low of P56.999 to a dollar could prompt the BSP to hike interest rate by 25 basis points on Sept. 22, ING Bank Manila's Senior Economist Nicholas Mapa said.

The ongoing supply shortages for select items such as sugar are adding pressure to food prices, which take up a huge part of the inflation basket.

Global supply chain challenges, as well as the ongoing war between Russia and Ukraine, have pushed up prices of oil and other commodities.

The National Economic and Development Authority said it would focus subsidy programs and interventions in support of domestic food supply to fight domestic inflation.

"Recovery is uneven within countries and across countries, and this results in very inefficient supply chains. This is expected to be temporary as markets transition to find the new balance between supply and demand," Socioeconomic Secretary Arsenio Balisacan said.

"The situation is made worse by the protracted Russia-Ukraine war, and the country’s weather disturbances particularly La Niña. These serve to magnify the low productivity in our agricultural sector, which needs to be supported immediately," he added.

-- with reports from Jessica Fenol, Warren De Guzman and Edson Guido, ABS-CBN News

• Bangko Sentral sees inflation ranging from 5.9 to 6.7 pct in August
• Inflation quickens further to 6.4 percent in July

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