Year-on-year headline inflation slowed down further to 2.8 percent in June from 2.9 percent in May, well within the BSP’s forecast of 2.5-3.4 percent for the month. This brought the year-to-date (ytd) average inflation rate to 3.0 percent, which is at the low end of the Government’s inflation target range of 3-5 percent for 2012. Meanwhile, core inflation, which excludes certain food and energy items to measure generalized price pressures, was stable at 3.7 percent. Core inflation averaged 3.5 percent for the first semester of the year.
The continued deceleration in June inflation was traced mainly to the slower price increases for non-food items, due largely to reductions in gasoline and diesel prices. Meanwhile, food inflation rose as most food commodities, particularly vegetables, fish and fruits, posted higher prices.
The latest inflation readings remain consistent with the BSP’s assessment of a manageable inflation outlook over the policy horizon, with average inflation likely to remain within the 3-5 percent target range. The BSP continues to keep a close watch on emerging developments on both the domestic and global fronts to ensure that monetary policy settings remain supportive of non-inflationary growth.