Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Wednesday inflation likely slowed to 4.3 percent in June from 4.5 percent in May, on lower prices and better supply of food and agricultural products.
“[The] point inflation projection for June 2021 is 4.3 percent,” Diokno told reporters in a mobile message.
“The BSP projects June 2021 inflation to settle within the 3.9 to 4.7 percent range. 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,” Diokno said.
These could be partially offset by the decline in prices of key food items such as rice, meat and fruits on improved supply.
Diokno said the BSP would continue to monitor emerging price developments to ensure that its primary mandates of price stability conducive to balanced and sustainable economic growth is achieved.
The government is scheduled to release the June inflation report next week.
Inflation averaged 4.5 percent in the first five months, higher than the target range of 2 percent to 4 percent for 2021. Inflation in May remained at 4.5 percent for the third straight month.
Fitch Solutions, a unit of Fitch Group, said earlier the moderation in inflation rate might compel the BSP to keep its policy rate on hold at a record-low of 2 percent before hiking it by 50 basis points by the end of 2022.
“We expect the surge in inflation to prove temporary on the back of a moderation in energy and food prices, as well as spare capacity within the Philippine economy over the coming quarters,” Fitch Solutions said in a report Monday.
“We believe the BSP will maintain accommodative monetary conditions until loan growth and domestic economic activity are on a sustained recovery and pandemic uncertainties have significantly abated,” it said.
The Monetary Board of the BSP kept the policy interest rate at 2 percent last week, taking into account the expected manageable inflation trajectory in the coming months. The interest rates on the overnight deposit and lending facilities were also retained at 1.5 percent and 2.5 percent, respectively.