MANILA — Philippine inflation likely eased further in June as lower domestic fuel prices and softer costs for key food items helped temper price pressures, although higher electricity rates and vegetable prices continued to pose upside risks, the central bank said ahead of next week's official data release.
The Bangko Sentral ng Pilipinas (BSP) said it expects June annual inflation to settle within a range of 6.0% to 7.0%, compared with 6.8% in May, citing declines in domestic oil prices as well as lower prices of major food items, including rice and meat. The Philippine Statistics Authority is scheduled to publish the official June consumer price index on July 7.
"The decline in domestic oil prices and lower prices of major food items, such as rice and meat, may temper inflation for the month," the BSP said in a statement.
The central bank said those factors were expected to offset, at least partly, upward pressure from higher electricity rates and increased vegetable prices during June. It added that it would continue to monitor developments in the Middle East for their potential impact on inflation and economic activity, reflecting concerns that renewed volatility in global energy markets could affect domestic prices.
Inflation slowed unexpectedly to 6.8% in May from 7.2% in April, supported by easing transport and food costs, although it remained well above the BSP's 3% target. Core inflation, which excludes selected volatile food and energy items, accelerated to 4.1% in May, indicating that underlying price pressures remained elevated.
Persistent inflation prompted the BSP to raise its benchmark policy interest rate by 25 basis points in June, its second consecutive increase, as policymakers sought to keep inflation expectations anchored despite signs that headline price growth had begun to moderate. BSP Governor Eli Remolona has said further policy tightening remains possible if inflation risks intensify.
The central bank said future monetary policy decisions would continue to be guided by incoming economic data, particularly developments affecting inflation and growth.
Economists have been watching fuel costs closely after oil prices retreated from recent highs, providing some relief for transport and production costs. However, officials have cautioned that geopolitical tensions and supply disruptions could quickly reverse that trend, while domestic utility charges and weather-related pressures on food supplies remain potential sources of inflation.
The Philippine Statistics Authority's June inflation report, due on July 7, is expected to provide the latest indication of whether price pressures are easing sufficiently to support the central bank's objective of returning inflation toward its target over the medium term.
