June inflation likely settled within 3.9-4.7%

HEADLINE INFLATION likely remained above the government’s annual target range for a sixth straight month in June, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

In a Viber message to reporters, Mr. Diokno said inflation likely settled within the 3.9% to 4.7% range in June, as electricity rates and oil prices remained elevated.

The central bank’s point inflation projection for the month is at 4.3%, he added.

If realized, June could mark the sixth straight month of inflation beyond the BSP’s 2-4% annual target.

The BSP’s point inflation projection is slower than the 4.5% in May, but much quicker than the 2.5% logged in June 2020.

“Higher prices of domestic petroleum products along with the upward adjustment in Meralco (Manila Electric Co.) electricity rates and a slightly weaker peso are the main sources of upward price pressures for the month,” Mr. Diokno said.

Latest data from the Department of Energy showed gasoline, diesel, and kerosene prices increased by P10.75, P9.25, and P7.70 per liter, respectively, year to date as of June 22.

Meanwhile, Meralco earlier said the overall rate rose by P0.0798 per kilowatt-hour (kWh) to P8.6718 per kWh in June from May’s rate of P8.5920 per kWh.

The peso closed at P48.50 a dollar on Thursday, based on data from the Bankers Association of the Philippines. It weakened by 80.5 centavos from its P47.695-per-dollar finish on May 31.

On the other hand, Mr. Diokno said lower prices of food staples such as rice, meat and fruits could have helped slow inflation in June.

In May, the government reduced the tariff rates for pork imports, as well as increased the minimum access volume, in an effort to bring down prices. A supply shortage of pork products due to the African Swine Fever outbreak has pushed prices higher, leading to faster inflation in previous months.

The Philippine Statistics Authority will report the June inflation data on July 6.

“Moving forward, the BSP will continue to monitor emerging price developments to ensure that its primary mandates of price stability conducive to balanced and sustainable economic growth is achieved,” Mr. Diokno said.

The central bank last week kept the key policy rate at a record low of 2%, citing the need for continued monetary policy support as the economy recovers.

During the policy review, the Monetary Board slightly raised its inflation forecast for the year to 4% from 3.9% previously. Average inflation for the first five months of the year stood at 4.4%. — Luz Wendy T. Noble