BSP sees June inflation easing slightly as food prices settle slowly

MANILA, Philippines — The Philippine central bank expects the pace of price increases in the local economy to have moderated slightly in June, thanks to cheaper food items that have been the source of inflation in recent months.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said its economists expect the inflation rate for the sixth month of the year to settle within the 3.9-4.7 percent range, with a median inflation estimate of 4.3 percent.

“Higher prices of domestic petroleum products along with the upward adjustment in Meralco electricity rates and a slightly weaker peso are the main sources of upward price pressures for the month,” the monetary regulator said.

“These could be partially offset by the decline in prices of key food items, such as rice, meat and fruits due to improved supply conditions,” it added.

If the BSP orecast for June proves accurate, this will mark the first time the inflation rate declined this year, after plateauing at 4.5 percent for the previous three months due to upward pressures on food items.

Specifically, the current inflation spike was caused by an African swine fever outbreak beginning in late 2019 that decimated the hog industry in Luzon and affected other producers around the country.

Inflation rate in May remained above the government’s target range of 2 to 4 percent as expensive food, especially pork, and higher transport costs kept the consumer price index elevated at 4.5 percent.

As such, the country’s headline inflation rate now averages 4.4 percent for the first five months of 2021.

Earlier, Socioeconomic Planning Secretary Karl Kendrick Chua also expressed optimism that the lower tariffs and quota on imported pork, which started in mid-May, would pull prices down as early as June.

The National Economic and Development Authority, which he heads, noted that meat inflation in May was 0.1 percent lower than the April rate, the first slowdown month-on-month in eight months.

“We expect to gradually see the benefits of Executive Order Nos. 133 and 134 in the coming months to help curb pork prices and provide relief to consumers and households,” Chua said.

“As we reopen our economy, we will continue to work to keep other drivers of inflation stable to ensure Filipinos recovering their jobs and income will not see their income eroded by higher prices,” Chua added.

The Philippine Statistics Authority is scheduled to release the official inflation rate for June on July 6, Tuesday.

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

TSB