Headline inflation was higher at 5.2 percent year-on-year in June compared to 4.6 percent in May using the 2012-based Consumer Price Index (CPI) series. The year-to-date average of 4.3 percent is above the high end of the inflation target for 2018 of 2.0 to 4.0 percent. Similarly, core inflation—which excludes certain volatile food and energy items to measure underlying price pressures—increased to 4.3 percent in June from 3.6 percent in the previous month. Likewise, month-on-month seasonally-adjusted headline inflation rose to 0.6 percent in June from 0.2 percent in May.
Most food items posted higher inflation in June specifically, rice, corn, meat, and vegetables as well as sugar, jam, honey, and confectionary, which partly reflect weather-related supply disruptions and the end of the rice harvest season. At the same time, non-food inflation also rose as inflation for educational services went up due to the approved tuition fee increases for academic year 2018-2019. The upward adjustment in LPG prices also contributed to the higher inflation reading.
The June inflation outturn is in line with the BSP's earlier assessment of predominant upside risks to the inflation path and of inflation remaining elevated in 2018. The peak will probably occur sometime in the third quarter before converging to the inflation target of 2-4 percent in 2019. The BSP will remain on guard against the risks to the public's inflation expectations and emerging second-round effects. The BSP stands ready to undertake any follow-through action necessary to ensure that inflation expectations are anchored and to safeguard the BSP’s inflation objective.