Economists Expect Slight Increase in June Inflation

Headline inflation likely rose at a slightly faster pace in June amid higher fuel and select food costs, but the growth in the consumer price index (CPI) is still seen to remain well below the government's two to four percent target, keeping the door open for further monetary easing.

- By KEISHA TA-ASAN

A poll of economists conducted by The STAR showed headline inflation likely settled anywhere from 1.3 to 1.6 percent in June, unchanged or up from the 1.3 percent print in May, which was the lowest clip in nearly six years.

Metrobank chief economist Nicholas Mapa and ING Bank both forecast inflation at 1.6 percent, citing the impact of higher electricity rates and fuel prices early in the month.

"Electricity prices as well as cost of select non-rice food items delivered upside pressure to inflation," Mapa said. "But rice deflation and lower year-on-year pump prices weighed on overall inflation."

Mapa said that with inflation below target and the government lowering growth targets, the door remains wide open for the Bangko Sentral ng Pilipinas (BSP) to consider further monetary easing in the coming months.

ING echoed the sentiment, noting that domestic fuel prices rose in response to the Iran-Israel conflict. "However, the increase in domestic fuel prices should be temporary and local pump prices are expected to fall in July," the bank said in a note.