BSP: Inflation likely eased in June to 6-7%
Philippine inflation likely slowed further in June, aided by a decline in oil prices, but is still expected to remain above the Bangko Sentral ng Pilipinas’ (BSP) target range.
The central bank said in a statement that inflation likely settled between 6 percent and 7 percent last month.
While the forecast leaves open the possibility that price gains accelerated from May’s 6.8-percent pace, it also points to a good chance that inflation moderated.
But even at the low end of the BSP’s estimate, inflation would remain above the central bank’s 2-percent to 4-percent target for a fourth consecutive month.
The Philippine Statistics Authority is scheduled to release the official June data on July 7.
“The decline of domestic oil prices and the lower prices of major food items, such as rice and meat, may temper inflation for the month,” the central bank said.
“However, higher electricity rates and vegetable prices could partly offset these downward price pressures,” it added.
The BSP has said it would “take necessary actions” to ensure inflation returns to its 3-percent target.
Last month, the Monetary Board, the top policymaking body of the central bank, raised its benchmark interest rate by a quarter percentage point to 4.75 percent, extending a tightening cycle that has now delivered a cumulative 50 basis points of increases.
BSP Governor Eli Remolona Jr. did not dismiss the possibility of extending the tightening cycle for the rest of the year, though he stressed that policymakers would want to take “baby steps” when it comes to rate hikes.
Higher borrowing costs are intended to curb spending by households and businesses, helping to ease inflationary pressures but also weighing on economic activity. The Philippine economy grew just 2.8 percent in the first quarter, its slowest pace since the pandemic recovery began, amid the twin shocks of a major corruption scandal that dented confidence and a sharp rise in global oil prices.
Policymakers have raised their inflation forecasts, with 2026 inflation now expected to average 6.4 percent from the previous estimate of 6.3 percent. For 2027, the projection was raised to 4.5 percent from 4.3 percent.
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