July 2023 Updates: Pause-Cut Scenario likely 

Philippine inflation eased substantially in June 2023 from 6.1% in May to 5.4% in the subsequent month, as price growth of food, non-alcoholic beverages, and restaurant and accommodation services continued to soften, and transport prices sustained a decline. Core inflation is also keeping a downward trend, decreasing from 7.7% in May to 7.4% in June.

This indicated gradually fading pressures on non-volatile commodity prices. Our view remains optimistic that inflation will continue to slow down towards year-end on account of higher base effects but remains vigilant of potential risks from second round effects and the impacts of El Niño.

Considering these developments particularly inflation, we have revised our average inflation forecast for FY 2023 to 5.8% (from 6.0%) and FY 2024 to 4.3% (from 4.5%), outlined as follows: