MANILA -- Inflation slowed to 3.7 percent in June even while increases in food prices continued to accelerate, the Philippine Statistics Authority (PSA) said Friday.

The June inflation rate was slower than the 3.9 percent rate seen in May, the PSA said, amid slower increases in the cost of electricity, fuels, water and housing.

Slower increases in transport costs also contributed to the lower inflation rate.

PSA Undersecretary and National Statistician Dennis Mapa noted that prices of food and non-alcoholic beverages had a higher annual increase of 6.1 percent in June from an annual increment of 5.8 percent in May 2024. 

"Food inflation at the national level rose to 6.5 percent in June 2024 from 6.1 percent in May 2024. In June 2023, food inflation was higher at 6.7 percent," the PSA said. 

Mapa said rice inflation also slowed slightly to 22.5 percent in June, from 23 percent in May. 

The price of regular milled rice went up slightly to P51.07 per kilo from P51.03 in May. Well-milled rice prices also climbed to P55.96 from P56.06 a month earlier. 

Meanwhile, special rice prices reached P64.56 in June, rising slightly from P64.41 the month before.

The inflation rate in June was still within the Bangko Sentral ng Pilipinas' 3.4 to 4.2 percent forecast and within the government's target range of 2 to 4 percent. 

Mapa said he cannot say for sure that inflation has peaked in May and will be easing for the rest of the year, noting that fuel, electricity, and meat and vegetable prices all went up in the first week of July.

“Hindi pa namin nakikita na ito ay talagang magkakaroon ng further downward na direction given na there are other factors to consider—as I’ve mentioned changes in electricity prices, yung increases sa price of oil and LPG,” he said. 

He also said that the wage hike in Metro Manila may affect July inflation.

“Nakita namin in the past na may mga increases, hindi naman sa overall ano, but sa mga selected commodity groups (ang impact),” he said. 

“Ang nakikita natin dito, in particular, yung commodity group na personal care and miscellaneous goods and services, let’s say mga beauty parlor, mga barber shop… saka yung restaurants and accommodation services din,” he explained.

The National Economic and Development Authority (NEDA) said it remains committed to keeping inflation within the government’s target range.

“The easing in our inflation rate in June, mainly due to lower electricity rates, highlights the importance of strengthening our energy sector to sustain our gains,” said Economic Planning Secretary Arsenio Balisacan. 

Balisacan also said NEDA will continue to work with government and other stakeholders to make sure Filipinos have sufficient and affordable rice.

For the first six months of the year, inflation averaged 3.5 percent.

Core inflation, which strips out volatile food and fuel items,  was 3.1 percent. 

The BSP has been keeping monetary policy tight in a bid to curb inflation.

The BSP kept interest rates steady in its June meeting, but noted that the balance of risks to inflation has shifted to the downside for 2024 and 2025.

BSP keeps rates steady in June as gov says August rate cuts now ‘more likely’

Security Bank chief economist Dan Roses said he expects the BSP to cut rates—25 basis points each—in August and in October.

He also said he thinks the BSP can afford to cut rates ahead of the US Federal Reserve.