Inflation likely slowed further to 1.3 percent in May, according to the mean average of estimates made by six economists polled by Malaya Business Insight.
As prices of key food items waned, especially rice, the respondents said inflation should show a deceleration again when the government releases the official data for May later this week.
Inflation slowed to 1.4 percent in April from 1.8 percent in March, the lowest since November 2019, or 5 ½ years ago, when the rate of inflation sagged to a low 1.2 percent, data released last month by the Philippine Statistics Authority (PSA) showed.
The downtrend in April was primarily brought about by the slower annual increase in the index of food and non-alcoholic beverages, the PSA said in May, while the transport index decreased by 2.1 percent from 1.1 percent in March.
The PSA is scheduled to hold a press conference on May’s inflation this Thursday, June 5.
BSP’s forecast range
The economists gave their respective inflation estimates after the Bangko Sentral ng Pilipinas (BSP) on Friday said inflation in May likely fell within the 0.9 percent to 1.7 percent range.
“Easing prices of rice and fish due to favorable domestic supply conditions in conjunction with lower oil prices, electricity rates, and the peso appreciation contributed to the downward price pressures for the month,” the BSP said in a statement.
The central bank’s policy-setting Monetary Board is expected to continue to take a measured approach in adjusting the BSP’s policy stance in line with its price stability objectives.
These objectives are conducive to a balanced and sustainable economic growth and employment, the BSP said.
Upper end of forecasts
Nicholas Mapa, the chief economist from Metrobank, said inflation likely settled at 1.5 percent in May.
While the downside pressure from rice deflation and private transportation costs exists, Mapa said the upward pressure from meat prices and utility costs nudged the headline number higher.
“We forecast inflation to remain on target and consistent over the policy horizon,” Mapa added.
Reinielle Matt Erece, an economist from Oikonomia Advisory & Research Inc., gave his May inflation forecast also at 1.5 percent.
Prices of certain livestock and vegetable items increased last month, “but these were offset by low oil prices in global markets and lower electricity generation prices,” Erece said.
The appreciation of the peso may have also lowered import costs, he said.
Sustained deceleration
“We expect May inflation to have eased slightly to 1.3 percent from 1.4 percent in April,” BPI’s chief economist, Jun Neri, said in a separate report.
The drop in rice prices, coupled with lower energy and fuel costs, continues to drive disinflation, he said.
However, these factors were offset by a rebound in vegetable and fruit prices during part of the dry season, significantly lowering agricultural output.
“Additionally, the lifting of the maximum suggested retail price for pork contributed to an uptick in meat prices during the month,” Neri said.
Headline inflation will stay subdued in the coming months, because of soft key commodity prices and the high base from last year, he said
But the favorable base effects, particularly of rice, will diminish in September, he added.
“This could gradually push the headline print close to, if not at, the 3 percent level by year-end,” Neri said.
Ruben Carlo Asuncion, the chief economist from Unionbank, also sees inflation settling at 1.3 percent.
He based his assumption on the “sustained deflation narrative” due to lower rice, fuel and electricity costs.
For now, despite the slight increases within the the broad food category in the non-rice consumer price index, Unionbank has taken the position of a deceleration in overall prices, Asuncion said in a message to this paper.
HSBC, RCBC see it even lower
“We expect headline inflation in May to slide even lower, decelerating to 1.2 percent,” HSBC’s Asean economist Aris Dacanay said.
Dacanay considers the strong peso and moderate global oil prices to have lowered the cost of energy.
“Though some volatility was seen in diesel prices, fuel prices, in general, are much lower today than on the last day of April,” he said.
“All in all, headline inflation likely remained flat, with risks tilted to the downside if the prices of other goods and services adjust alongside easing energy prices,” Dacanay added.
Michael Ricafort, RCBC’s chief economist, said inflation could have eased further to 1.2 percent.
He cited the strong peso against the US dollar in 14 months as among the significant factors that kept inflation from accelerating.
Global crude oil prices and other major global commodity prices are also at their lowest in three to four years in recent months, while rice in the global market is currently trading at its lowest since November 2021, Ricafort said.
Good weather also helped increase agricultural production, and lower electricity rates in May 2025 also reined in prices of goods and services, he said.
In the months until August, Ricafort sees staying below 2 percent before accelerating to 2 percent in September to December.
He said he expects the full-year 2025 average inflation to settle just below the BSP’s 2 percent to 4 percent target range.
