MANILA, Philippines – Inflation decelerated for the fourth straight month to 1.3% in May amid lower power prices, the Philippine Statistics Authority (PSA) reported on Thursday, June 5.
This brings the country’s average inflation rate for January to May 2025 to 1.9%, below the government’s target range of 2% to 4%.
The Bangko Sentral ng Pilipinas (BSP) earlier forecast inflation in May would fall between 0.9% and 1.7%, citing favorable supply conditions in rice and fish, lower electricity rates and oil prices, as well as the strengthening of the peso. But it noted that prices of vegetables and meat have gone up.
Bank of the Philippine Islands lead economist Jun Neri pointed to the Department of Agriculture’s lifting of the maximum suggested retail price for pork as a possible cause of rising meat prices.
“Headline inflation is projected to remain subdued in the coming months, largely supported by sustained softness in key commodity prices and high base from last year. However, favorable base effects — particularly for rice — are expected to diminish starting in September,” he said in a statement.
If inflation continues to fall below target, Neri believes it is plausible that the BSP will cut interest rates during the Monetary Board’s policy meeting on June 19.
BSP Governor Eli Remolona Jr. earlier hinted at possibly slashing interest rates two more times this year. (READ: Bangko Sentral resumes easing cycle by cutting policy rates to 5.5%)
Adjusting key interest rates is one of the ways central banks control inflation. When rates are cut, people are more enticed to spend money amid cheaper borrowing costs. – Rappler.com