Consumer prices in Philippines gained in August, but still inflation risks subdued giving a chance for monetary policy makers to keep interest rates at the current low record in order to support economic growth, worth mentioning that economic growth accelerated in the second quarter.

Consumer prices in Philippines gained 0.1% during August from a year earlier compared with a previous incline by 0.2%, while it was forecasted to climb 0.2%. Monthly consumer prices climbed 0.2% compared with 0.3% in July and it came inline with forecasts.

However, beverage and tobacco costs inclined by 1.8% last month, while fuel, water and electricity costs dropped 5.4% from a year earlier.

Amando Tetangco, the Central Bank governor, said that inflation remains within the bank's target, which is giving policy makers the opportunity to keep interest rates at the low record of 4.00% that would help to accelerate economic growth during the second half of this year, having in mind that the bank expected inflation rate to be between -0.3% and 0.6% in August.

The Central Bank of Philippines cut interest rates six times as it was lowered by 2.0% between December and July to reach 4.00% which helped to boost the economy during the second quarter.

Nevertheless, the economy expanded an annual 1.5% in the second quarter from a revised 0.6%, while it grew 2.4% on quarterly basis from a previous contraction by 2.1%. The economy was backed by government spending as the government allocated as much as 330 billion peso focused on infrastructure projects and providing job opportunities.

Philippine's budget deficit widened to reach $34.6 billion in July compared with a prior $30.2 billion in June that will be a challenge for policy makers, especially with the decline in tax revenue as it was negatively affected by declining profits in the business sector.

Finally, Mr. Diwa Guinigundo, the central bank's deputy governor, said that inflation is expected to average 3.0% during this year, while next year it may average 3.3%.