Philippine inflation is projected to rise to as high as 7% in June, driven by increases in electricity costs and vegetable prices that counterbalance declines in oil and other food items.
The central bank’s month‑ahead forecast places June inflation between 6% and 7%, a sharp uptick from the 1.4% rate recorded a year earlier. The upper estimate would represent the fastest rise in two months or the highest since the 7.2% figure in April.
At the lower end, inflation could cool from the 6.8% reading in May, marking a second consecutive month of easing. Regardless, June would likely be the fourth month in a row that annual inflation stays above the 2%–4% comfort range.
Official figures for June will be released on July 7.
While falling domestic oil prices and lower costs for rice and meat may temper inflation, higher electricity rates and vegetable prices are expected to offset those downward pressures.
Fuel prices fell in June, with gasoline, diesel, and kerosene prices reduced by retailers.
Rice prices also declined: regular milled rice dropped 1.8% to 50.12 pesos per kilogram, and well‑milled rice fell 2.1% to 56.66 pesos per kilogram, though both remain above a year‑ago levels.
Power rates increased in June, with Manila Electric Co. raising charges by 0.1488 pesos per kilowatt‑hour to a total of 14.4833 pesos per kWh, citing higher generation costs linked to peso depreciation.
The peso traded above 60 pesos per dollar in June, closing at 61.36 on June 30, a slight strengthening from 61.59 on May 30.
The central bank now expects this year's average inflation to settle at 6.4% and next year's at 4.5%.
Policymakers will remain vigilant, guided by incoming data on inflation, growth prospects, and developments in the Middle East that could impact economic activity.
A senior adviser projects June inflation around 6.5%, noting that food costs, energy and transport prices, and a weaker peso continue to drive price pressures.
The adviser warns that inflation is likely to stay above the 2%–4% target range in the near term, prompting caution against premature easing.
The central bank raised its policy rate by 25 basis points to 4.75% in June, its second hike this year, with three additional meetings scheduled for 2026.
While gradual relief may come later in the year if geopolitical tensions ease and supply conditions improve, households and businesses should prepare for ongoing volatility from weather shocks and global oil movements.
A senior research fellow attributes the upper end of June’s inflation estimate to faster food price growth and predicts that inflation will ease in the second half of the year, though the trajectory will be uneven and closely tied to energy markets.
Key factors that could influence future inflation include crude oil prices, shipping conditions through the Strait of Hormuz, core inflation, consumer and market expectations, and wage growth.
