Headline inflation decelerated slightly to 4.4 percent year-on-year in June from 4.5 percent in May. The June inflation reading was within the BSP’s forecast range of 4.1-5.0 percent for the month. This brought the year-to-date average inflation rate to 4.2 percent, within the Government’s inflation target range of 4.0 percent ± 1.0 percentage point for 2014. Core inflation—which excludes certain food and energy items to better capture underlying price pressures—eased to 2.8 percent in June from 3.1 percent in the previous month. On a month-on-month seasonally-adjusted basis, the consumer price index increased by 0.1 percent.
The slightly lower June headline inflation reading was due largely to slower increases in prices of non-food items. In particular, the downward adjustment in electricity charges and price reductions in LPG and kerosene products more than offset the tuition fee hikes for the current school year. By contrast, food inflation increased further as most food commodities, particularly rice, meat, eggs, oils, vegetables (i.e., garlic, tomatoes, cabbage, carrots, and pechay), and sugar posted higher prices due to limited domestic supply.
Governor Amando M. Tetangco, Jr. indicated that the BSP will continue to monitor evolving price trends, particularly the prospects of second-round effects of supply-side pressures. The BSP stands ready to undertake appropriate measures as needed to safeguard its price and financial stability objectives.