BSP sees June inflation settling at 1.1-1.9%

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) expects inflation in June to remain well below target, with its month-ahead forecast range set at 1.1 to 1.9 percent, indicating continued benign price pressures despite some upticks in key commodity groups.

In a statement yesterday, the BSP said upward price pressures for the month likely came from more expensive meat and vegetables, elevated global oil prices and a weaker peso.

“These pressures, however, could be partially offset by lower prices of rice, fish and fruits, as well as lower electricity rates,” the central bank said.

Looking ahead, the BSP said it remains committed to safeguarding price stability by ensuring that monetary policy settings are conducive to sustainable economic growth and employment.

The Philippine Statistics Authority will release the June inflation data on July 4.

The latest BSP forecast aligns with analysts’ expectations of a slight pickup in inflation for June. In a recent poll conducted by The STAR, economists from Metrobank, ING and HSBC said June consumer prices likely rose from May’s 1.3 percent, the lowest in nearly six years.

Sarah Tan, an economist from Moody’s Analytics, expects a 1.4 percent reading for June.

“On the positive side, inflation in the food basket will remain stable, supported by a modest decline in rice prices. However, this is being offset by fuel price hikes following a spike in global oil prices triggered by geopolitical tensions in the Middle East,” Tan said.

“Several petroleum companies raised pump prices during the third and fourth weeks of June, putting upward pressure on the utilities basket,” Tan added.

Despite the expected uptick, inflation remains well below the BSP’s two to four percent target range.

Analysts said this opens the door for further monetary policy easing this year, with one more 25-basis-point rate cut possibly on the table.

UnionBank chief economist Ruben Carlo Asuncion said the current environment offers a strategic window to capitalize on the favorable price landscape as any potential upticks in inflation are expected to be modest.

“We anticipate the BSP will continue its policy easing cycle, likely delivering a final 25-basis point rate cut in October. This move would allow the central bank to assess the cumulative impact of its earlier rate adjustments while maintaining a supportive stance for growth,” he said.

The central bank has already slashed policy rates by a cumulative 125 basis points since August last year, with the most recent 25-basis-point cut delivered last month.

The BSP will next meet on Aug. 28 and Oct. 9 for its fourth and fifth policy review this year.