Inflation eased to 2.8 percent in June from 2.9 percent in May, the National Statistics Office reported on Thursday.
"The downtrend was brought about by the slower annual increments posted in the indices of alcoholic beverages and tobacco; housing, water, electricity, gas, and other fuels; transport; and recreation and culture," the NSO said.
The Bangko Sentral ng Pilipinas had forecast an inflation rate of between 2.5 and 3.4 percent last month.
The actual June figure brings the year-to-date average to three percent, or at the low end of the BSP's full-year target range of up to five percent.
The NSO said tuition hikes across the country pushed up inflation month-on-month to 0.5 percent in June from 0.1 percent in May.
"Price increments in the heavily-weighted food items such as chicken, pork, fruits, vegetables, eggs, milk, cheese and sugar were also noted. In addition, higher prices of selected school supplies, clothing, footwear and household items and increased salary of household helper contributed to the uptrend," the NSO said.
Food inflation alone picked up to two percent in June from 1.7 percent in May.
"The still-weak global growth prospects, the recent appreciating peso trend and the generally-benign inflation forecast of most market participants set against our country's current above-trend economic growth path support our view that inflation will remain close to the low end of our target range," BSP Governor Amando Tetangco Jr. said in a statement.
"In addition, oil prices have come down from their recent highs. That said, we continue to be watchful, particularly of developments in the Middle East, to check their impact on oil price volatilities and our own domestic growth," he said.
"We will take appropriate action to help ensure our inflation targets are not breached either at the upper or the lower bounds," he added.
Next policy rate hike in 1Q 2013
In a research note, HSBC said the low inflation rate was due to falling transportation costs and a favorable base effect.
"On the heels of the latest sovereign upgrade, the good news continues. Headline inflation continues to be remarkably benign, staying at or below three percent for the fifth consecutive month," said Trinh Nguyen, HSBC economist.
"However, on a trend basis, price pressures are climbing again. Even then, for the rest of the year, headline inflation is expected to come in at the bottom of the central bank’s three to five percent target. As such, the BSP has scope to keep rates accommodative for the time being," Nguyen added.
HSBC expects the next policy rate hike to occur in the first quarter of 2013.
source: interaksyon.com
