The Bangko Sentral ng Pilipinas said Friday inflation in June likely eased to as low as 5.3 percent from 6.1 percent in May on lower prices of meat, fruits and liquefied petroleum gas.
Its month-ahead forecast showed that inflation settled within a range of 5.3 percent to 6.1 percent, representing a sustained decline from a peak of 8.7 percent in January.
“The lower prices of meat and fruits as well as the rollback in LPG prices could contribute to downward price pressures during the month,” the BSP said.
The BSP said, however, the higher prices of several food items such as rice, vegetables and fish, increased domestic oil prices and electricity rates and the depreciation of the peso against other currencies were the primary sources of upward price pressures in June.
Distributors announced early in June a reduction of at least P6 per kilogram of LPG which translated into P67.10 to P68.20 decrease for a regular 11-kg household LPG tank.
The successive decline in inflation in the past four months since January compelled the Bangko Sentral ng Pilipinas to keep the overnight borrowing rate steady at 6.25 percent in its last Monetary Board meeting.
Inflation softened to 8.6 percent in February, 7.6 percent in March, 6.6 percent in April and 6.1 percent in May and averaged 7.5 percent in the first five months. This was above the government’s target range of 2 percent to 4 percent.
Outgoing BSP Governor Felipe Medalla earlier said the latest baseline projections continued to suggest a gradual return of inflation to the target band over the policy horizon.
The Philippine Statistics Authority will announce the official June inflation next week.
Meanwhile, the PSA said the Producer Price Index for manufacturing in May also eased from the previous months. PPI measures the average change over time in selling prices received by domestic producers of goods and services.
It said the PPI posted a slower growth of 2 percent in May compared to 2.3 percent in April and 7.2 percent in the same period last year.
“The slower annual growth rate of PPI in May 2023 from April 2023 was brought about by the slowdown in the annual increase in manufacture of food products industry division at 3.7 percent in May 2023 from 4.7 percent annual increment in April 2023,” the PSA said in a statement posted on its website.
The manufacture of food products contributed 36.7 percent to the slower annual growth rate of the PPI for manufacturing in May. The manufacture of food products industry division has the highest weight in the computation of PPI out of the 22 industry divisions in manufacturing.
Other primary contributors to the deceleration of the annual growth of PPI were manufacture of coke and refined petroleum products with faster annual decline of -4.2 percent during the period from -2.4 percent in the previous month, and manufacture of transport equipment with an annual drop of -2.7 percent in May 2023 from -2.1 percent in April 2023.
The PSA said of the remaining 19 industry divisions, three exhibited annual decreases during the period.
Meanwhile, 16 industry divisions registered annual increases in May. The highest annual increment was observed in manufacture of computer, electronic and optical products; and manufacture of leather and related products, including footwear, both at 6.0 percent.
