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June Inflation Inches Up to 2.8 Percent

07.05.2013

Headline inflation rose slightly to 2.8 percent year-on-year in June from 2.6 percent in May. The June inflation reading was within the BSP’s forecast of 2.0-2.9 percent for the month. This brought the year-to-date average inflation rate to 2.9 percent, slightly below the Government’s inflation target range of 4.0 percent ± 1.0 percent for 2013. By contrast, core inflation, which excludes certain food and energy items to measure generalized price pressures, decreased slightly to 2.9 percent in June from 3.0 percent in the previous month. However, month-on-month headline inflation increased to 0.6 percent from 0.1 percent in May.

The higher inflation in June was attributed largely to the increase in non-food inflation, particularly education, transport, and electricity, gas, and other fuels. Inflation on educational services went up due to the approved tuition fee increases for academic year 2013-2014. Likewise, prices of gasoline and diesel increased during the month, reflecting the higher oil prices in the international market. Upward adjustments in electricity rates, due to higher generation and transmission charges, also contributed to the rise in non-food inflation. Meanwhile, food inflation held steady as increases in the prices of vegetables and rice were offset by the lower inflation rates of meat, milk, fruits, oils and fats, and sugar.

Governor Amando M. Tetangco, Jr. said that the June inflation reading continues to support the BSP’s assessment of a manageable inflation environment over the policy horizon and the appropriateness of the current monetary policy stance. Looking ahead, the BSP will monitor closely evolving domestic and external developments and will continue to assess its monetary policy stance in fulfillment of its primary mandate of delivering price stability conducive to balanced and sustainable economic growth.

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