MANILA – Headline inflation will likely further decelerate to 5.3 percent in June from 6.1 percent in May due to lower food prices, an economist said.
In a Viber message to the Philippine News Agency, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said year-to-date, inflation is projected to settle at 5.6 percent.
"Some food prices continued to ease recently on better weather conditions during the dry season and in the early part of the rainy season that led to increased planting that increased local food supplies, with some glut seen in other agricultural products, that help in lowering food prices," he said.
Ricafort said inflation is expected to continue to ease in the coming months and might settle at 4 percent levels in the third quarter and to 3 percent level by the end of the year.
He said the slowdown in inflation could fundamentally support faster economic growth going forward amid reduced drag from inflationary pressures.
However, Ricafort said offsetting risk factors that could still lead to some pick up in prices and could slow down the deceleration in year-on-year.
Inflation for the coming months include higher rice prices amid higher world rice prices; higher electricity rates, higher water and other utility rates; higher pork prices due to the African swine fever (ASF) that hit additional provinces especially in Southern Philippines.
"Another risk factor for the coming months: El Niño drought especially in the latter part of 2023 to early 2024 that could reduce food production and supplies, such as rice, thereby could lead to some pick up in prices and overall inflation, especially given the high weight of rice in the inflation basket," he said.
The official June 2023 inflation data will be released by the Philippine Statistics Authority next month. (PNA)
