Title inflation could rise slightly in June as steady food prices help offset the surge in fuel prices, analysts said.
one BusinessWorld The median inflation rate in June, which was 1.5%, accelerated from 1.3% in May, but was still below the 2-4% target range of Sentral NG Pilipinas (BSP) in Bangkok.
If implemented, this would be the fastest clip in three months, or 1.8% since March. However, this will be slower than 3.7% prints in June 2024.
Bangko Sentral NG Pilipinas (BSP) will release its month-long inflation forecast on Monday, June 30.
The Philippine Statistics Agency (PSA) will release inflation data for June on July 4.
Maybank Investment Banking Group Group Research’s June inflation forecast is 1.5%, citing slower food and electricity costs.
“Factors include low inflation rates for key groups such as food and electricity, which may offset some upward pressure on fuel costs increased this month due to the rise in global fuel prices due to escalating conflict in the Middle East,” Mebuck said.
Sarah Tan, an analytical economist at Moody, expects inflation to settle 1.4% in June, said inflation in the food basket may remain stable, “with falling rice prices, that supports it.”
PSA reported that rice prices fell further in June, with the average P42.77 per kilogram of conventional rice on average P42.77 per kilogram.
“Our food price tracker shows that food inflation has fallen further – close to zero – but this should be completely offset by a temporary rebound in housing and utility inflation,” said Miguel Chanco, chief emerging Asian economist at Pantheon macroeconomics.
Aris D. Dacanay, an ASEAN economist at HSBC Global Research, noted that Metro Manila’s electricity rate fell by 0.9% in June due to low power generation fees.
Manila Electric Company (Meralco) reduced P0.1076 to P12.1552 per kilowatt-hour in the last month of June. Generation expenses have dropped by 0.9% to P7.3552 since May.
“We expect inflation to reach a year-on-year increase of 1.6% in June (Year-Year-Year), up about 0.2% from the previous month,” said Nicholas Antonio T. Mapa, chief economist at Nicholas Bank & Trust Co., “. Electricity prices and the cost of certain non-good foods put up pressure on inflation.”
Chinabank Research said inflation could accelerate at the start of the new school year due to rising pump prices and rising costs related to meat, vegetables and education.
Peak fuel price
Ms. Tan said the rise in fuel prices caused by the Middle East conflict may put up pressure on the utility basket.
In June, gasoline pump prices adjusted net increase P6.3, diesel p8.25 p8.25 p8.25, and kerosene net was p6.5 p6.5.
“Retail gas prices surged 3% per day on June 17, a response to rising tensions between Iran and Israel, but slightly adjusted at the end of the month as tensions dipped,” Mr Dacanay said.
Reuters reported on Friday that the sharp drop has been the highest weekly since March 2023, as there were no large supply disruptions in the Iran-Israel conflict, so any risk premium evaporated.
“Although global oil prices have been lowered after the ceasefire between Israel and Iran, the risk of reconciliation remains and may raise prices again. Still, falling rice prices may ease inflationary pressures,” Chinabank Research said.
Ing Philippines said the rise in domestic pump prices “should be temporary” and prices are expected to fall in July.
Speed reduction prospects
Emilio S. Neri, principal economist at the Bank of the Philippines Islands. Inflation may start to accelerate before September because “Rice’s niche base will disappear at that time.”
“Title printing may remain within the BSP target range, which can allow them to cut again by the end of 2025,” Mr Neri said.
The Monetary Commission cut 25 benchmark points (BP) for the second time in a row at its June 19 meeting, raising its policy interest rate by 5.25% amid a benign inflation outlook and slowing economic growth.
BSP Governor Eli M. Remolona, Jr. It also said they could cut another $2.5 billion this year.
BSP cuts its inflation forecast to 1.6% from 2.4% this year. It also expects inflation to reach 3.4% in 2026 and 3.3% in 2027.
Angelo B. Taningco, vice president and head of research at Security Bank, said he expects to include inflation for the rest of the year, with a full-year forecast of 1.9%.
“The upside risks of our inflation outlook include global oil price shocks caused by the resurgence of the Israel-Iran conflict. We still expect an inflation environment with a manageable inflation environment and a quarter-point policy rate lowered by BSP.”
Ruben Carlo O. Asuncion, chief economist at Unionbank, said he expects inflation to rise gradually into September and end with a score of 2.5%.
“We expect BSP to continue its policy easing cycle, possibly reducing the final 25-tax tax rate in October. This move will allow the central bank to assess the cumulative impact of its early tax rate adjustments while maintaining a supportive stance of growth,” Mr Asuncion said.
Ms. Tan said the conflict in the Middle East could lead to continued global oil prices, which could mean higher domestic fuel and utilities costs.
The Philippines is a net oil importer and is particularly vulnerable to global oil prices.
“If these risks are achieved, they may limit the scope of further easing policy for BSP, especially when the second round of effects begins to be established. That is, inflation should remain within the target range without a sustained supply shock,” Ms Dan said.
Over the entire year, Moody’s inflation forecast was 2.2%.
Mr Chanco said he saw enough rooms and needed two more times the 25 Tels cuts for $2.5 billion.
The Monetary Commission’s remaining policy meetings this year are scheduled to be held on August 28, October 28 and December 11. Aubrey Rose A. Inosante
