Inflation in the Philippines may have slightly accelerated in June, driven largely by a spike in oil prices linked to tensions in the Middle East, according to a poll of economists ahead of the official data release.
Based on the median estimate of 14 economists surveyed by the Inquirer, inflation likely rose to 1.5 percent year-on-year in June—up from 1.3 percent recorded in May. The Philippine Statistics Authority is set to confirm the figure on July 4.
Despite the uptick, economists agreed that the inflation rate would remain below the Bangko Sentral ng Pilipinas’ (BSP) target range of 2 to 4 percent.
Analysts pointed to oil market volatility as the key culprit. “June inflation had a lot of moving parts—parts that moved in different directions,” said HSBC economist Aris Dacanay, who forecasted a 1.5 percent inflation rate. “Retail gas prices surged as a reaction to rising tensions between Iran and Israel, only to have slightly moderated in the tail-end of the month when tensions de-escalated.”
He added that the increase in fuel costs was partially countered by a drop in electricity rates in Metro Manila due to lower generation charges.
Food prices offered some relief, with rice costs continuing to fall. However, the overall trend was mixed, as meat prices saw an uptick. The entry of cheaper goods from China, redirected due to the ongoing U.S. trade dispute, also helped dampen inflationary pressure.
“While global factors such as US tariff adjustments may exert upward pressure and the short-lived higher oil price effects, these are likely to be offset by China’s ongoing export of deflationary goods,” explained UnionBank chief economist Ruben Carlo Asuncion, who also pegged inflation at 1.5 percent.
Asuncion warned, however, that rice deflation may ease soon, and upward pressure could emerge in housing, food, and service costs during the latter half of the year.
Meanwhile, the BSP’s Monetary Board recently lowered the policy rate by 25 basis points to 5.25 percent, a move widely seen as supportive of growth amid stable inflation trends.
Still, Philippine National Bank economist Alvin Arogo cautioned that this low inflation base may pose risks down the line. “Even a small reversal in the current disinflation momentum, such as from a sustained elevation in oil prices, can result in a temporary breach in the BSP’s target sometime next year,” he said.
