The Bangko Sentral ng Pilipinas (BSP) expects inflation to continue easing in July, although higher fuel prices, electricity rates and a weaker peso could keep consumer prices elevated.
In a statement released Friday, the BSP projected July inflation to settle between 5.6% and 6.6%.
The central bank said upward price pressures during the month were driven by higher domestic fuel prices, increased electricity rates, rising fish prices and the depreciation of the peso against a stronger US dollar.
“Upside price pressures during the month could stem from elevated domestic petroleum pump prices, higher electricity rates, increasing fish prices, and the depreciation of the peso against the strengthening US dollar,” the BSP said.
The inflation forecast comes after the country’s inflation rate slowed to 6.4% in June, aided by lower fuel prices following a temporary ceasefire between Israel and Iran.
Oil prices, however, climbed again in mid-July as tensions in West Asia resurfaced, triggering successive fuel price hikes. Diesel, kerosene and gasoline prices increased by as much as P3 to P11 per liter last week, followed by another round of hikes ranging from P4 to P7 this week.
Electricity costs also remained under pressure after the Department of Energy reported that the Philippines’ average electricity rate reached P12.43 per kilowatt-hour, the highest in Southeast Asia.
Meanwhile, the peso weakened to 61.847 against the US dollar on July 24, adding to inflationary pressures by making imported goods more expensive.
During his State of the Nation Address earlier this week, President Ferdinand Marcos Jr. acknowledged the impact of rising fuel and electricity prices on consumers and proposed measures to ease the burden, including the removal of system loss charges from electricity bills.
The BSP said easing prices of key food items, including rice, meat, vegetables and fruits, could help offset some of the upward pressure on inflation.
