Philippine annual inflation quickens slightly, but no bar to more rate cuts

July 4, 2025 - 11:10 AM
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BSP building
Facade of the Bangko Sentral ng Pilipinas in Manila. (BSP/Released)
  • Annual inflation rises slightly due to higher utility costs
  • Central bank sees room for rate cuts to support growth
  • Slower food inflation offsets utility cost increase; rice prices decline

MANILA — Philippine annual inflation quickened slightly in June, driven by increased utility costs, but remained below the central bank’s target range and left the door open for further interest rate cuts to support economic growth.

The consumer price index rose by 1.4% year-on-year in June, marginally above May’s 1.3% pace but below the median 1.5% increase forecast in a Reuters poll. This brought the year-to-date average inflation to 1.8%, below the central bank’s 2% to 4% target for 2025.

The slight price uptick last month was due to increases in housing, water, electricity, gas, and other fuel prices, which accelerated to 3.2% from 2.3% in May, the statistics agency said on Friday. This was partially offset by a record 14.3% decline in rice prices, which helped ease food inflation.

“Inflation is projected to remain below the lower end of the target in 2025, primarily due to the continued easing of rice prices,” the central bank said in a statement.

Core inflation, which strips out volatile food and energy prices, was unchanged at 2.2% in June.

BSP Governor Eli Remolona said on Thursday that low inflation could give the central bank room to cut rates two more times this year to help shore up economic activity amid growing external risks.

The BSP cut its key policy rate PHCBIR=ECI for a second consecutive time in June, bringing it to 5.25%, its lowest level in two and a half years. The next policy meeting is scheduled for August 28.

— Reporting by Mikhail Flores and Karen Lema; Editing by Martin Petty and Shri Navaratnam