LOWER fuel and key food prices may drive inflation back within target levels in August, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

Consumer price growth, which spiked to 4.4 percent in July, was estimated to have declined to 3.2- to 4.0-percent range.

The Philippine Statistics Authority is scheduled to release inflation data for the month on September 5.

"Higher electricity rates and higher prices for agricultural commodities, owing to unfavorable weather conditions, are the primary sources of upward price pressures for the month," the central bank said in a statement.

"These factors are expected to be offset by lower domestic oil prices as well as lower rice, fish and meat prices along with the peso appreciation," it added.

The BSP said it would "continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment."

BSP Governor Eli Remolona Jr. anticipated that inflation would exceed the target in July due to base effects but expects it to fall back within the target range in the coming months.

Despite the uptick, the BSP policymaking body Monetary Board decided last August 15 to reduce key policy rates by 25 basis points (bps) to 6.25 percent, ending the 17-year high of 6.5 percent.

Remolona maintained his view that another 25 bps cut will be in order later this year, expecting inflation to trend downward to within the target range until 2026.

The risk-adjusted forecast for 2024 was raised to 3.3 percent from 3.1 percent, and that for 2025 was cut to 2.9 percent from 3.1 percent. The central bank, meanwhile, expects inflation to rise to 3.3 percent in 2026.

The baseline forecast for this year was also adjusted to 3.4 percent from 3.3 percent, while that for 2025 was trimmed to 3.1 percent from 3.2 percent. For 2026, the BSP expects inflation to settle at 3.2 percent.