The Bangko Sentral ng Pilipinas said Thursday inflation in June likely reached as high as 6.5 percent, up from 5.4 percent in May, on weaker peso and higher oil and power rates.
It said in a statement the June inflation rate likely settled within a range of 5.7 percent to 6.5 percent. The Philippine Statistics Authority will release the official June inflation rate next week.
“The continued increase in domestic oil prices, upward adjustment in electricity rates, higher prices of key food items and peso depreciation are the primary sources of inflationary pressures during the month. These could be offset in part by lower price of LPG and fish,” the BSP said.
The peso slumped to the 55-a-dollar level this week, the lowest in more than 16 years, as investors preferred the greenback following the aggressive interest rate adjustment made by the US Federal Reserve.
The peso closed at 54.975 on Thursday, stronger than 55.06 a dollar on Wednesday. Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said in an emailed message that the peso recovered, following the recent decline in global crude oil prices.
Inflation in May settled at 5.4 percent, a 42-month high, driven by higher prices of food, non-alcoholic beverages and transport. The May inflation was the fastest since the 6.1 percent registered in November 2018.
This brought inflation in the first five months to 4.1 percent, slightly higher than the upper end of the target range of 2 percent to 4 percent for the year.
The BSP said it would continue to closely monitor emerging price developments to enable timely intervention to arrest emergence of further second-round effects, consistent with its mandate of price and financial stability.
The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, on June 23 raised for the second time this year the benchmark policy interest rate by 25 basis points to 2.5 percent to rein in the rising inflation rate.
It noted that upside risks continue to dominate the inflation outlook until 2023, with pressures emanating from the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply and pending petitions for transport fare hikes on elevated oil prices. Julito G. Rada