MANILA -- Inflation returned to its downward path in June as government measures to tame food prices kicked in, official data released Friday showed.
The 2.7-percent increase in the consumer price index was the slowest since September 2017, said National Statistician Claire Dennis Mapa. It was also the lowest since the first tranche of tax reforms raised duties on fuel and sugar-sweetened drinks in January 2018.
"In supply-side inflation, the pop dissipates very quickly as soon as you get the supply-side conditions ironed out, the Rice Tarrification Law, importation of food products really helping stabilize supply," ING Bank economist Nicholas Mapa told ANC's Market Edge.
Financial markets will "listen closely to a rather dovish" Bangko Sentral ng Pilipinas Governor Benjamin Diokno for cues on the timing of the next interest rate cut, he said.
Analysts earlier said the BSP could reduce the benchmark borrowing rate and the reserve requirement ratio for banks as early August.
Food was the main driver for cooling inflation in June, with rice prices falling further from May, Mapa said. Year-to-date inflation was at 3.4 percent.
For Malacañang, quick inflation is “now a thing of the past,” said Presidential Spokesman Salvador Panelo as he hailed economic managers for “doing their jobs splendidly well.”
“We’re very pleased with the inflation rate because we have slayed the soaring inflation rate. It is now a thing of the past and we credit the economic managers for doing their jobs splendidly well. We also credit the lawmakers of the last Congress for passing laws that stopped it,” he told reporters Friday.
The median of a Reuters poll of economists predicted a 2.9 percent inflation in June while the Bangko Sentral ng Pilipinas expected it to be in the 2.2 to 3 percent range.
In a separate statement, the National Economic and Development Authority (NEDA) said the government would continue to implement preemptive measures to mitigate potential impact of weather disturbances on inflation.
“We note that the prevalence of adverse weather conditions in the country remains an upside risk to inflation, especially with the start of the rainy season,” NEDA said.
“The government will continue putting in place preemptive measures to mitigate the impact of weather-related shocks and uncertainties in the international oil market,” it said.
Inflation soared to near 10-year highs in 2018, prompting the government to revamp its rice policy, which put tariffs in place of quotas for imports of the staple grain.