Inflation eases to 6.4 percent in June as fuel prices decline

MANILA, July 12 ------ Inflation eased to 6.4 percent in June as fuel prices fell compared to previous months, the Philippine Statistics Authority (PSA) said. “The downtrend in the overall inflation in June 2026 was primarily brought about by the slower annual increase in the transport index at 12.8 percent during the month from 16.2 percent in May 2026,” the PSA said.

Food inflation was also slower in June at 5.4 percent compared to 5.8 percent in May. The June clip was within the Bangko Sentral ng Pilipinas' forecast range of 6 to 7 percent. It also brought the average inflation for the first half of the year to 4.8 percent. National Statistician and PSA Undersecretary Claire Dennis Mapa flagged the rising prices in electricity, restaurants, and cafes when asked if he sees inflation going downward in the coming months. “Siguro napansin niyo mahal yung kuryente, ang ating electricity inflation ay 12 percent nitong June 2026, and this is the highest in close to 3 years,” he noted.

“Ang ating restaurants, cafes and the like, ito yung mga food consumed outside the household, pataas na siya. Ngayon 7 percent nung June, 6.8 percent nung May, and since January it’s increasing,” he said. “Ito yung mga kinakain ng ating kababayan sa labas, yung mga workers, estudyante,” he explained. “So this is also the highest since September 2023 at 7.1 percent.”

Mapa also said he sees the Middle East conflict still affecting the country’s inflation going forward, as transportation costs still contribute substantially to the inflation number. PSA data also showed that gasoline inflation slowed to 39.2 percent in June from 51.6 percent in May, while diesel had a 39 percent inflation in June versus 58.5 percent in May. But the numbers are still high compared to the previous year.

Despite the trend that inflation is going down, Mapa said they continue to monitor prices because the P85 minimum wage hike could also affect the prices of goods, as businesses may increase rates. "Start ng wage hike sa National Capital Region kasi input din yan sa labor. Ito yung posibleng tumaas pa sa susunod na buwan," added Mapa.

Core inflation, which excludes food and energy items that are prone to big price swings, increased to 4.4 percent in June 2026 from 4.1 percent in May 2026. In June 2025, the core inflation rate was lower at 2.2 percent. The purchasing power of the Philippine peso is at P0.7386, when compared to 2018 levels.

The Bangko Sentral ng Pilipinas said inflationary pressures remain strong. "Rising core inflation indicates broadening price pressures and second-round effects, including higher inflation expectations," it said in a statement. The Department of Economy, Planning and Development (DEPDev), meanwhile, welcomed the lower inflation numbers. “Every percentage point drop in inflation matters to Filipino families,” said Economic Planning Secretary Arsenio Balisacan. “It means household budgets can go further, especially for poor families who spend a large share of their income on food and transportation.”

The DEPDev said the easing inflation pressures reflect both improving global conditions as well as the impact of government measures, such as targeted assistance for farmers, fisherfolk, and transport service providers, as well as the lifting of toll fees for vehicles transporting agricultural produce. “If we want stable prices, we need a stable food supply,” said Balisacan.

The government's chief economist also said the government aims to reduce the impact of weather shocks such as the strong El Nino on the economy. He also highlighted the government's plan to establish a strategic petroleum reserve together with the Japanese government. “Our goal is not only to bring inflation down but to keep it low and stable. That requires stronger food production, more efficient supply chains, and greater resilience to climate and other shocks,” Balisacan said.

The Bank of the Philippine Islands (BPI) earlier said it sees inflation easing slightly in June, citing falling Dubai crude prices and the start of the harvest season for rice. Inflation slightly eased to 6.8 percent in May from 7.2 percent in April. However, this was still one of the highest inflation rates in recent years, and was way above the 2 to 4 percent target set by economic managers.

The skyrocketing prices of oil following the US-Israeli attacks on Iran have been blamed for the surge in inflation since March. But even with the expected normalization of oil shipping on the Strait of Hormuz, analysts have said that it may take months before fuel prices return to pre-Mideast war levels. The cabinet-level Development Budget Coordination Committee (DBCC) recently revised its average inflation forecast for the year to 6 to 7 percent.

Source: news.abs-cbn.com