EXPLAINER: Why inflation has slowed, but electricity bills are still higher

Headline inflation eased in June, but customers of the Manila Electric Company (Meralco) have been charged more during the month, and are set to pay even more per kilowatt-hour (kWh) in July. The two can happen at the same time, as reported by GMA News' Darlene Cay.

Slower inflation

Inflation—or the pace at which consumer prices grow—stood at 6.4% in June 2026, down from the 6.8% in May, but higher than the 1.4% in June 2025.

While the rate decelerated, this does not mean that prices have gone down, but simply that prices continued to increase but at a slower pace.

The Philippine Statistics Authority (PSA) attributed this to the slower increase in transport costs, as global oil prices have started to stabilize as tensions in the Middle East eased.

Moving forward, the Bangko Sentral ng Pilipinas (BSP) expects inflation to average 6.4% this year, higher than its 2.0% to 4.0% target range.

Electricity rates up

Meralco, which provides electricity to Metro Manila, hiked its rates in June to P14.4833 per kWh from P14.3345 per kWh in May. This is set to be increased even further by 34 centavos to P14.8261 per kWh in July.

The company attributed the higher rates to an increase in generation charges, which grew by 18 centavos to P9.2504 per kWh from P9.0704 per kWh in June, largely owing to higher fuel prices.

Increases were also seen in charges from power supply agreements (PSAs) due to the impact of the persisting Middle East conflict on the global energy market, and in the Wholesale Electricity Spot Market (WESM) as demand in Luzon reached record highs.

This is because more than half of the country's electricity supply is generated by coal, natural gas, and oil-based power plants, which use petroleum products such as diesel, fuel oil and biodiesels.

The rise in petroleum prices will lead to higher generation charges, the primary reason for the increase in your electricity bill.

The generation charge is the cost of the electricity distributors like Meralco purchase from power suppliers, which it passes on to consumers and constitute a sizeable portion of the bill.

The WESM, meanwhile, is where extra electricity stores are bought and sold by suppliers, distributors and retailers. On May 28, 2026, Luzon's demand reached a record 14,534 megawatts against a limited supply, entailing additional power purchases from WESM.

Overall, the slower inflation and higher electricity rates are not contradictory. Inflation shows how fast prices are increasing, while electricity rates depend on the actual cost of producing and delivering power. — BM, GMA News