SLOWER increases in transport costs helped bring inflation down to 6.4 percent in June from 6.8 percent a month earlier, the Philippine Statistics Authority (PSA) reported on Tuesday.
Consumer price growth eased for a second straight month after hitting an over three-year high of 7.2 percent in April. It was also within the Bangko Sentral ng Pilipinas’ (BSP) estimate of 6.0-7.0 percent for the month but lower than the 6.5-percent median in a Manila Times poll of economists.
Core inflation, which excludes select food and energy items, rose to 4.4 percent from 4.1 percent in May. It was also higher than the 1.4 percent seen in June 2025.
“The main reason for the lower inflation rate in June compared with May 2026 was the slower increase in transport prices, which posted an inflation rate of 12.8 percent,” National Statistician Claire Dennis Mapa said during a briefing.
“Transport accounted for 61.1 percent of the decline in the country’s overall inflation rate,” he added.
Transport inflation decelerated to 12.8 percent in June from 16.2 percent in May as energy costs fell due to hopes for peace in the Middle East.
Food inflation, meanwhile, slowed to 5.4 percent from 5.8 percent but remained much higher than the 0.1 percent recorded a year earlier.
The slowdown was mainly due to a faster decline in meat prices. Slower price increases for fish and other seafood and rice also helped.
BSP likely to keep tightening
The Bangko Sentral ng Pilipinas, however, said that “inflationary pressures remain strong.”
“Global oil and fertilizer prices remain elevated in June and continue to drive domestic fuel and food prices,” it said in a statement.
“Rising core inflation indicates broadening price pressures and second-round effects, including higher inflation expectations.”
The BSP, which has raised key interest rates twice so far this year in response to inflationary pressures, said its latest forecasts showed inflation would remain elevated.
Headline inflation is expected to stay above the 2.0- to 4.0-percent target range in 2026 and 2027 before easing closer to the 3.0 percent target in 2028.
The BSP said it would continue to monitor recent developments, particularly in the global oil market, and take these into account at its next policy meeting.
“The Monetary Board will continue to be guided by incoming data and is prepared to take further monetary action as needed to ensure that inflation returns to the 3.0-percent target,” it said.
Citi economists Wei Zheng Kit and Helmi Arman said another 25-basis-point rate hike at the August policy meeting was likely, with the earliest possible pause seen in October.
They said risks to inflation remained tilted to the upside, driven by a July minimum wage increase and its potential impact on broader prices, delayed pass-through of electricity and food costs and the continued weakness of the peso.
These factors, they said, will likely be difficult for the BSP to ignore.
“An October pause requires a combination of lower oil prices delivering a material downward revision to BSP’s forecasts and/or downside surprises in growth and activity data that would suggest a continuation of below-trend growth,” the economists said.
“Limited fiscal support available to a below-trend economy also cautions against overly aggressive tightening,” they added.
Keeping food affordable
Socioeconomic Planning Secretary Arsenio Balisacan, meanwhile, said easing inflation reflected improving global conditions and coordinated government measures to address price pressures.
“If we want stable prices, we need a stable food supply,” Balisacan said.
“Reducing losses from weather disturbances and other supply disruptions remains one of the most effective ways to protect both consumers and producers from future price shocks,” he added.
Balisacan said the government was implementing the El Niño Food Security Action Plan, backed by P26.13 billion, to improve disaster preparedness, secure food supplies, reduce income losses for affected farmers and fisherfolk, and make affordable food more accessible.
He also said the Philippine and Japanese governments were also moving forward with plans to establish a national strategic petroleum reserve to help cushion the country against geopolitical shocks and sharp swings in oil prices.
“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.
Agriculture Secretary Francisco Tiu Laurel Jr., meanwhile, pushed for an extension of the P50 per kilogram price cap on imported rice following slower increases in prices of the staple.
Rice inflation slowed to 15.0 percent last month from 15.5 percent.
“The latest inflation numbers show that keeping food affordable delivers real benefits to Filipino families, especially those who spend a large portion of their income on basic necessities,” Tiu Laurel said.
The Department of Agriculture also said the June inflation results indicated that efforts to stabilize food supply and moderate rice prices were proving to be effective.
“For policymakers, the data underscore a familiar reality: keeping staple food affordable and readily available remains one of the most effective tools for keeping inflation in check,” it said.
