Economists see slightly higher June inflation 

Headline inflation likely rose at a slightly faster pace in June amid higher fuel and select food costs, but the growth in the consumer price index (CPI) is still seen to remain well below the government’s two to four percent target, keeping the door open for further monetary easing, according to a report by Philippine Star.

A poll of economists conducted by The STAR showed headline inflation likely settled anywhere from 1.3 to 1.6 percent in June, unchanged or up from the 1.3 percent print in May, which was the lowest clip in nearly six years.

Metrobank chief economist Nicholas Mapa and ING Bank both forecast inflation at 1.6 percent, citing the impact of higher electricity rates and fuel prices early in the month.

“Electricity prices as well as cost of select non-rice food items delivered upside pressure to inflation,” Mapa said. “But rice deflation and lower year-on-year pump prices weighed on overall inflation.”

Mapa said that with inflation below target and the government lowering growth targets, the door remains wide open for the Bangko Sentral ng Pilipinas (BSP) to consider further monetary easing in the coming months.

ING echoed the sentiment, noting that domestic fuel prices rose in response to the Iran-Israel conflict. “However, the increase in domestic fuel prices should be temporary and local pump prices are expected to fall in July,” the bank said in a note.

HSBC ASEAN economist Aris Dacanay pegged inflation at 1.5 percent, pointing out that prices moved in “different directions” in June.

“Retail gas prices surged three percent on June 17 as a reaction to rising tensions between Iran and Israel, only to have slightly moderated at the end of the month when tensions de-escalated,” he said.

On the other hand, electricity rates in Metro Manila fell by 0.9 percent month-on-month due to lower generation charges.

In terms of food, Dacanay said meat prices rose, especially chicken, while rice prices continued to decline.

Economists from Union Bank of the Philippines, Bank of the Philippine Islands, Oikonomia Advisory & Research Inc. and Moody’s Analytics also forecast a 1.4 to 1.5 percent inflation print for June.

Unionbank chief economist Ruben Carlo Asuncion said the bank projects headline inflation to hit 1.5 percent in June. “This anticipated low point in inflation reflects favorable base effects and subdued price pressures, setting the stage for a mild V-shaped recovery in the months ahead.”

Asuncion said inflation would gradually rise to two percent by September and end the year at 2.5 percent, well within the BSP’s two to four percent target band. He also said the environment remains favorable for another 25-basis point rate cut by the BSP in October.

“We expect inflation to start accelerating by September as the favorable base from rice will fade by then,” BPI lead economist Jun Neri said. “Headline prints will likely remain within BSP target which could allow them to cut once more before the end of 2025.”

Oikonomia economist Reinelle Matt Erece also forecast a 1.5 percent print, attributing the increase to upward movements in oil and food prices, especially livestock and fish. He noted that risks such as typhoons, holiday spending and renewed geopolitical tensions may push inflation higher in the coming months.

Sarah Tan of Moody’s Analytics and ANZ Research both expect a 1.4 percent reading for June, saying global oil price spikes had been partially offset by declining rice prices and stable food inflation.

ANZ added that sequential inflation likely rose by 0.1 percent month-on-month, following a 0.1 percent decline in May, and maintained its forecast of two more BSP rate cuts in the second half of the year.

Meanwhile, Pantheon Macroeconomics’ Miguel Chanco was the most dovish among the analysts, expecting no change in inflation from May’s 1.3 percent reading.

“Food inflation probably will fall quite noticeably close to zero, but this should be offset fully by a big bounce in housing and utilities inflation,” Chanco said.

He expects inflation to remain below the BSP’s two percent floor in the near term, with only a gradual pickup ahead barring unexpected shocks.

The Philippine Statistics Authority will release the official June inflation data on Friday, July 4.