Inflation eased for a second straight month in June, offering consumers and businesses some relief from elevated prices, but a pickup in underlying price pressures could keep the Bangko Sentral ng Pilipinas (BSP) on course for another interest rate increase.
Data released by the Philippine Statistics Authority on Tuesday showed headline inflation slowed to 6.4 percent in June from 6.8 percent in May. Average inflation in the first half reached 4.8 percent, still well above the BSP’s 2 to 4 percent target.
The deceleration was driven largely by slower increases in transport costs, which eased to 12.8 percent from 16.2 percent, alongside softer price growth for food and non-alcoholic beverages and household furnishings.
Food inflation also moderated to 5.4 percent from 5.8 percent as meat prices fell further and increases in fish and rice prices eased. The implementation of a price cap on imported rice helped temper prices.
The report, however, offered a mixed picture. Core inflation, which strips out volatile food and energy items and is closely watched by policymakers, accelerated to 4.4 percent in June from 4.1 percent in May. The increase suggests underlying demand-driven price pressures remain firm even as headline inflation continues to edge lower.
Several sectors continued to post faster price increases, including housing and utilities, healthcare, education, restaurants, and tobacco products, underscoring the broad-based nature of inflation despite the headline slowdown.
Food and non-alcoholic beverages remained the biggest contributor to overall inflation, accounting for 2.0 percentage points of June’s 6.4 percent reading, followed by housing and utilities at 1.7 percentage points and transport at 1.2 percentage points.
Inflation rate for the bottom 30 percent income households decelerated to 8.0 percent in June 2026 from 8.4 percent in May 2026. This brings the average inflation rate for this income group from January to June 2026 to 5.5 percent.
The latest figures reinforce expectations that inflation may have passed its recent peak. However, the acceleration in core inflation is likely to complicate the BSP’s policy calculus.
While easing headline inflation reduces pressure on consumers, persistent underlying price gains may not yet provide policymakers with sufficient confidence to pause monetary tightening, keeping another rate increase firmly in play as the central bank seeks to anchor inflation expectations.
