Monetary authorities should remain on their toes despite the softening of inflation in the past five months from a peak of 8.7 percent in January 2023, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said over the weekend.
Remolona, in a speech during the BSP’s 30th anniversary reception for the banking community Friday night, underscored the still elevated core inflation.
Core inflation, the change in the costs of goods and services, excludes volatile food and energy prices.
“It’s too soon to declare [a] victory. Core inflation remains high. There are still upside risks to inflation. For example, risks in the form of El Niño and further supply shocks. We will wait and see,” Remolona said.
“We will analyze the data as they arrive, and that analysis will decide monetary policy down the road,” he said.
Inflation in June slowed to a 13-month low of 5.4 percent from 6.1 percent in May, pulled down by slower increases in the prices of food and non-alcoholic beverages. This was also slower than 6.1 percent in June 2022.
Inflation averaged 7.2 percent in the first half of 2023, above the target range of 2 percent to 4 percent for the whole year.
Core inflation settled at 7.4 percent in June from 7.7 percent in May 2023. Core inflation averaged 7.7 percent in the first six months.
The BSP raised the key interest rates by a total of 425 basis points from May 2022 to March 2023, before taking a prudent pause in the last two Monetary Board meetings amid the sustained easing of inflation.