The National Statistics Office also revised upward the inflation rate in July to 12.3 percent from 12.2 percent.

This brought the average inflation rate for the eight months to August to 8.8 percent.

“This figure is within (the National Economic and Development Authority’s) inflation forecast of 12.1 to 12.7 percent,” said its director-general Ralph Recto.

“But with this trend, meeting the 5.5 percent growth for the year would be a tough challenge, though it remains our fighting target,” Recto said in a statement.

Soaring food and energy prices have already slowed economic growth to 4.6 percent in the first half, down sharply from more than seven percent for the whole of 2007.

“Annual inflation rates were higher in the commodity groups except in the food, beverages and tobacco index,” the statistics office said in a statement.

The news sent Philippine shares prices 1.1 percent down at Friday’s close.

Goldman Sachs told Dow Jones Newswires it expects the central bank to raise its key interest rates by 25 basis points this year, probably on October 9, to rein in inflation.

“Overall though, the extent of the tightening is likely to be measured as the (central bank) will be restrained by continued slowing growth in the coming quarters,” the company said.

The central bank last month raised rates by 25 basis points, taking the overnight borrowing rate to 6.0 percent and the lending rate to 8.0 percent.

Despite the uptick, central bank governor Amando Tetangco said the August data indicate inflation has started to moderate on the back of more stable food prices.

“A reversal in the downtrend of oil prices remains the biggest risk to the (easing) inflation outlook,” he said.

Tetangco said the central bank expects inflation to peak either in September or October, and the average for this year to be at the lower-end of the forecast range of between 9.0 and 11.0 percent — albeit outside the official target range of 3.0-5.0 percent.

While the depreciating peso could also fuel inflation, Tetangco views this as temporary and expects foreign exchange inflows in the last three months of 2008 from Filipinos working abroad to start buoying the local currency.

Early Friday, the peso slipped to a fresh one-year low of 46.80 pesos to the dollar.

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