Headline inflation in June slowed down to 2.3 percent from 2.4 percent in May, bringing down the year-to-date average to 2.6 percent from 2.7 percent in January-April. The June inflation was within the 2.2-2.9 percent forecast range of the Bangko Sentral ng Pilipinas (BSP) and was markedly lower than the 6.7 percent inflation posted a year ago. The lower inflation was mainly attributable to the slower price increases in fuel, light and water; food, beverages and tobacco; and services.
However, month-on-month, inflation went up by 0.6 percent following the 0.3 percent increase in May. Meanwhile, core inflation, which excludes volatile food and energy items, went down to 2.5 percent after being pegged at 2.6 percent from March to May.
Indicators continue to point to benign inflation readings for the rest of the year. While demand has increased moderately, the continued ample supply of food and the strong peso are seen to temper price pressures in the near term.
However, the strong growth of domestic liquidity, although it has recently decelerated, continues to pose a risk to future inflation. The volatility in oil prices and the possibility of additional wage adjustments also add risks to the inflation outlook. The BSP continues to keep a close watch over these and other risks to inflation and stands ready to act preemptively to ensure that the monetary policy stance remains consistent with price stability.