MANILA :Philippine annual inflation quickened slightly in June, driven by increased utility costs, but remained below the central bank’s target range and left the door open for further interest rate cuts to support economic growth.
The consumer price index rose by 1.4 per cent year-on-year in June, marginally above May’s 1.3 per cent pace but below the median 1.5 per cent increase forecast in a Reuters poll. This brought the year-to-date average inflation to 1.8 per cent, below the central bank’s 2 per cent to 4 per cent target for 2025.
The slight price uptick last month was due to increases in housing, water, electricity, gas, and other fuel prices, which accelerated to 3.2 per cent from 2.3 per cent in May, the statistics agency said on Friday. This was partially offset by a record 14.3 per cent decline in rice prices, which helped ease food inflation.
“Inflation is projected to remain below the lower end of the target in 2025, primarily due to the continued easing of rice prices,” the central bank said in a statement.
Core inflation, which strips out volatile food and energy prices, was unchanged at 2.2 per cent in June.
BSP Governor Eli Remolona said on Thursday that low inflation could give the central bank room to cut rates two more times this year to help shore up economic activity amid growing external risks.
The BSP cut its key policy rate for a second consecutive time in June, bringing it to 5.25 per cent, its lowest level in two and a half years. The next policy meeting is scheduled for August 28.
