Inflation rate in June likely accelerated to as high as 2.4 percent from 1.6 percent in May, on higher tuition and food prices, Bangko Sentral ng Pilipinas said Tuesday.
“The BSP forecast suggests that June inflation could settle within the 1.5 to 2.4 percent range. Upside inflation pressures could come from the increase in tuition fees as well as in rice and vegetable price,”Bangko Sentral Governor Amando Tetangco Jr. said in a text message.
Tetangco, however, said the aforementioned increases could be partly offset by the decline in electricity rates and domestic oil prices.
Power distributor Manila Electric Co. earlier said the residential rate for a typical household consuming 200 kilowatt-hours went down in June by P0.13 per kWh, bringing the rate to P8.32 per kWh, the lowest since January 2010.
The reduction was due to the downward movement in the generation charge, which more than offset a higher transmission charge.
“Going forward, the BSP will continue to monitor evolving price trends to ensure price stability conducive to a balanced and sustainable economic growth,” Tetangco said.
Inflation averaged 1.2 percent in the first five months, slower than Bangko Sentral’s official target range of 2 percent to 4 percent this year.
The manageable inflation environment coupled with robust domestic growth prompted the policy-setting Monetary Board of Bangko Sentral ng Pilipinas to keep the benchmark interest rates steady last week.
Interest rates were kept at 3.5 percent for overnight lending, 3 percent for overnight borrowing and 2.5 percent for deposit facilities. The reserve requirement ratios were also left untouched.
Meanwhile, Finance undersecretary Gil Beltran said inflation in June would likely reach 1.8 percent.
“Inflation rate for this month may inch to 1.8 percent on account of higher food price increase [largely due to vegetables] and possibly higher price increase in the education sub-group,” Beltran said.
Beltran said despite the slight increase in inflation in June, the lower prices of oil and power prices would temper the price increase.
“This month saw Meralco rates hit their seven-year low. Current fuel prices are still significantly lower than last year,” Beltran said.
“Benign inflation will enable the country to maintain monetary policy stance that allows continued rapid growth within the targeted 6.8 to 7.8 percent,” Beltran said.
“This also strengthens the country’s capability to manage risks arising from external shocks including the Brexit and the Fed normalization,” he said. With Gabrielle H. Binaday