Poll: Inflation likely to edge up in June

FUEL price hikes following heightened uncertainty arising from tensions in the Middle East could drive an inflation uptick in June, analysts said.

The median forecast in a Manila Times poll was 1.5 percent, slightly higher than May’s 1.3-percent result but within the Bangko Sentral ng Pilipinas’ (BSP) 2.0 to 4.0-percent target.

The central bank will issue its own estimate for the month today and official data will be released by the Philippine Statistics Authority on Friday, July 4.

Inflation is one of the indicators used by monetary authorities in determining key interest rates and the June result, along with July data due Aug. 5, will be considered during their next meeting on Aug. 28.

Pressure from oil

Pantheon Macroeconomics economist Miguel Chanco had the lowest forecast of 1.3 percent, saying that while food inflation should “fall quite noticeably … this will be offset by a big bounce in housing and utilities inflation.”

Moody’s Analytics economist Sarah Tan and Chinabank Research, meanwhile, both said that consumer price growth could post a slight rise to 1.4 percent.

“Inflation in the food basket will remain stable, supported by a modest decline in rice prices,” Tan said.

“However, this is being offset by fuel price hikes following a spike in global oil prices triggered by geopolitical tensions in the Middle East,” she added.

“Several petroleum companies raised pump prices during the third and fourth weeks of June, putting upward pressure on the utilities basket.”

Chinabank Research noted that while global oil prices had eased following a ceasefire between Israel and Iran, “the risk of renewed conflict remains and could drive prices higher again.”

“Still, inflationary pressures may be tempered by declining rice prices,” it added.

For Philippine National Bank economist Alvin Arogo, Union Bank of the Philippines chief economist Ruben Carlo Asuncion, HSBC Global Research economist Aris Dacanay and Rizal Commercial Banking Corp. chief economist Michael Ricafort, inflation could stay within target but go up to 1.5 percent.

“Benign inflation will likely persist this year despite the seasonal upward price pressure from weather disturbances in the second half,” Arogo said.

“However, the drawback of low inflation in 2025 is an unfavorable base for 2026.”

Asuncion said US tariffs and briefly higher oil prices would push inflation up, but this could be offset by cheaper exports from China, which supplies 28.2 percent of Philippine imports.

At the same time, rice prices are expected to fall more slowly while inflation in other areas like food, housing and services may rise in the second half.

“With inflation remaining well within target and any future increases expected to be modest, the current environment presents a strategic opportunity to leverage the favorable price landscape,” Asuncion said.

Dacanay noted that energy prices had gone both ways: gasoline rose 3.0 percent on June 17 but eased later as tensions cooled, while electricity rates in Metro Manila dropped 0.9 percent due to lower generation charges.

“Non-food CPI (consumer price index) … likely remained stable as deflationary pressures from Chinese imports of manufactured goods remain,” he added.

“Taking everything in consideration, we expect headline inflation in June to have slightly accelerated.

With the highest forecasts of 1.6 percent, Emmanuel Lopez from the University of Santo Tomas Graduate School and ING Global Market Research said the increase in prices of petroleum product, which would have likewise increased transport costs, would push inflation higher.

A weaker peso could also drive consumer prices up, he added, and Lopez warned that the United States’ plan to tax remittances could also have a impact moving forward.

ING, meanwhile, also pointed to the surge in global oil prices and the corresponding hike in local pump prices, but said the increase would be temporary.

More rate cuts?

Below-target inflation over the last three months has allowed the BSP’s policymaking Monetary Board to reduce key interest rates twice so far this year.

After an unexpected pause in February as it sought to get a handle on the likely impact of tariff hikes announced by US President Donald Trump, the Monetary Board resumed easing in April and June, cutting by 25 basis points each.

During the June 19 meeting, it acknowledged continued uncertainty from US trade policy and added worries from the conflict in the Middle East, which could lead to inflationary pressures, but said the outlook for consumer prices remained well-anchored.

It slashed the inflation forecast for this year to 1.6 percent from 2.4 percent, but raised those for 2026 and 2027 to 3.4 percent and 3.3 percent, respectively, from 3.3 percent and 3.2 percent.

The BSP’s policy rate currently stands at 5.25 percent. Analysts have said that two more 25-bps cuts could be ordered before the year ends, while central bank Governor Eli Remolona Jr. has said that at least one more is likely.