Inflation cools to 5.4% in June, lowest in 13 months

Headline inflation eased for the fifth consecutive month in June 2023 to 5.4 percent, down from 6.1 percent in May and at its lowest level since the 5.4 percent recorded in May 2022. The June inflation rate is within the 5.3 to 6.1 percent forecast range of the Bangko Sentral ng Pilipinas (BSP) and settled below the median estimate of 5.5 percent by private analysts.

“The sustained deceleration of inflation in June – the lowest in 13 months – suggests that the government’s efforts to tackle inflation are working. This indicates that we are on track to bring inflation back within the target range of 2 to 4 percent sometime in the fourth quarter of this year and below the lower limit of the target in the first quarter of 2024,” Finance Secretary Benjamin E. Diokno said.

This sustained downtrend was primarily due to the slower increase in Food and non-alcoholic beverages, Transport, and Housing, water, electricity, gas and other fuels.

Seasonally adjusted month-on-month (MoM) inflation slowed down to 0.1 percent in June 2023, from a 0.3 percent monthly rate in the previous month.

The main contributors to headline inflation for the month of June are Food and non-alcoholic beverages contributing 2.6 percentage points (ppt); Housing, water, electricity, gas and other fuels (1.2 ppt); and Restaurants and accommodation services (0.8 ppt).

Food inflation contributed 2.3 ppt to the overall inflation in June 2023. The main contributors to food inflation are vegetables (0.36 ppt); fish (0.35 ppt); flour, bread and other bakery products (0.33 ppt); milk, other daily products and eggs (0.33 ppt), and rice (0.32 ppt).

Meanwhile, top contributors to the non-food inflation are food and beverage serving services (0.79 ppt), actual rentals (0.72 ppt), passenger transport services (0.51 ppt), and electricity (0.35 ppt).

Core inflation, which excludes selected volatile food and energy items, slowed down to 7.4 percent from the 7.7 percent recorded in May, depicting a tapering in price pressures. This brings the average core inflation for the first six months of the year to 7.7 percent.

All regions also continued to exceed the BSP’s target of 2 to 4 percent, except for Cordillera