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UPDATE 1-Philippines July annual inflation slows to 2-yr low

Karen Lema and Neil Jerome Morales

* July CPI lowest in two years

* Slower inflation on lower food, fuel costs

* July CPI supports policy rate cut views

MANILA, Aug 6 (Reuters) - Philippines annual inflation slowed for a second straight month in July on lower food and fuel prices, the country's statistics agency said on Tuesday, reinforcing expectations that the central bank will resume cutting interest rates this week.

The consumer price index rose 2.4% in July from a year earlier, matching the median forecast in a Reuters poll, and within the central bank's 2.0%-2.8% projection for July.

Last month's inflation figure, which was the slowest in two years, confirmed consumer prices are back on a downward path after a surprise uptick in May, giving the central bank room to ease monetary policy.

Core inflation, which strips out volatile food and fuel items, also eased slightly to 3.2% in July from 3.3% in June.

Slowing inflation has allowed the country's central bank to start unwinding last year's interest rate hikes which totalled 175 basis points, with a 25 basis points cut in its benchmark interest rate in May.

"With new data evidencing a continued trend of slowing inflation in the Philippines and the U.S. Federal Reserve cutting rates ... it is widely expected by the market that the Philippines central bank will be cutting rates this Thursday," ING Bank economist Nicholas Mapa said.

All 10 economists in a Reuters poll expect the central bank to resume lowering rates after a pause in June, with all of them pencilling in a quarter-point cut on Thursday to support economic growth.

The same poll came up with a median forecast of 5.9% for second quarter growth, faster than the previous quarter's 5.6% expansion, but below the government's 6%-7% target for the year. (Editing by Shounak Dasgupta)

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