Philippine core inflation accelerated to 4.4% in June, the fastest pace in nearly three years, pointing to broader price pass-through from energy shocks. Analysts broadly expect the Bangko Sentral ng Pilipinas (BSP) to raise rates by another 25 basis points at its August policy meeting, with total additional tightening for the year potentially reaching 50 bps. While headline inflation has eased, sticky core inflation alongside the National Capital Region minimum wage hike, faster infrastructure spending and a possible strong El Niño are seen adding to near- to mid-term price pressures. The BSP has said it will keep a hawkish stance to anchor inflation expectations.

The Bangko Sentral ng Pilipinas warned that inflation pressures could intensify as the El Niño season approaches and conflict in the Middle East flares up again. June inflation averaged 4.8%, well above the BSP’s 2%-4% tolerance range, while core inflation rose to 4.4%, its highest in nearly three years. The BSP has raised rates by a total of 50 basis points to 4.75%, and markets expect another 25-basis-point increase within the year. Rising oil prices, the peso weakening past 61 per dollar, minimum-wage increases and food-price risks were flagged as persistent upside pressures.