Inflation likely continued downtrend in June, says BSP

MANILA  -The rate of increase in the prices of goods and services commonly purchased by households may have slowed down yet again in June, settling somewhere in the range of 5.3 percent to 6.1 percent, according to the Bangko Sentral ng Pilipinas (BSP).

The midpoint of the forecast range—5.7 percent—suggests that the BSP expects inflation to have eased from 6.1 percent in May and for the fifth month in a row since hitting 8.7 percent in January.

The Philippine Statistics Authority (PSA) will announce the official readout on July 7.

Also, the PSA said the growth rate of factory-gate prices slowed down for the eighth consecutive month to 2 percent in May, driven by receding prices of food products.

READ:  PH inflation rate for May 2023 slows down further to 6.1%

Downward price pressures

“Lower prices of meat and fruits as well as the rollback in LPG prices could contribute to downward price pressures in June,” the BSP said in a statement.

However, higher prices of key food items, such as rice, vegetables, and fish, along with the increase in domestic oil prices and electricity rates as well as the depreciation of the peso are the primary sources of upward price pressures in June.

READ: Rice prices surge as production costs rise

The BSP wants to shepherd inflation to a full-year average of 3 percent or within the range of 2 percent to 4 percent. So far, from January to May, the upward change in the consumer price index averaged at 7.5 percent.

Meanwhile, latest data on prices of manufactured goods as they leave producers’ premises show the producers price index (PPI) declining steadily since registering at 7.7 percent in September 2022.

Manufacturing inflation

Most recently, manufacturing inflation was pegged at 2.3 percent in April.

The slower annual growth rate of PPI in May 2023 from April 2023 was brought about by the slowdown in the annual increase in manufacture of food products industry … at 3.7 percent in May from 4.7 percent,” the PSA said in its latest monthly report.

The manufacture of food products has the highest weight in the computation of the PPI, and accounted for 37 percent of the slower year-on-year growth in prices last May.

The incremental rise in prices of food products leaving factories slowed to 3.7 percent in May from 4.7 percent in April.

Also major contributors to the slower growth of factory prices in May were the manufacture of coke and refined petroleum products, and manufacture of transport equipment.

In May, manufacturing activities in the Philippines expanded faster to an eight-month best as both new orders and production grew at quicker rates, according to S&P Global Market Intelligence.

READ: PH factory activity expansion accelerated in May

The company said their purchasing managers index for the Philippines leaned toward growth for the 16th month in a row in May, supported by a solid rise in both output and factory orders.

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