This year’s headline inflation decelerated further to 5.4 percent year-on-year in June from 6.1 percent in May, settling near the lower end of the Bangko Sentral ng Pilipinas (BSP)’s forecast range of 5.3 to 6.1 percent for the month.
The resulting year-to-date average of 7.2 percent, however, it is still above the government’s average inflation target range of 2.0-4.0 percent for the year.
Meanwhile, core inflation, which excludes selected volatile food and energy items to capture underlying demand-side price pressures, also slowed down to 7.4 percent in June from 7.7 percent in May.
On a month-on-month seasonally adjusted basis, inflation eased to 0.1 percent in June from 0.3 percent in the previous month.
Inflation continued to moderate as major commodity groups posted lower inflation readings. Food inflation decreased mainly due to lower inflation for meat, fruits, and sugar amid improving domestic supply conditions.
Year-on-year transport inflation was negative for the second consecutive month, partly due to the downward impact of base effects.
The inflation rate for housing, water, electricity, gas, and other fuels also eased, further contributing to the moderation in non-food inflation.
The sustained decline in inflation reaffirms the BSP’s assessment that inflation will return to the target range by Q4 2023 in the absence of further supply shocks.
Nonetheless, the BSP will continue to closely monitor evolving conditions given persistent upside risks to the inflation outlook.
The BSP is prepared to resume monetary policy tightening as needed in keeping with its price stability mandate.
