Inflation, or the rate of change in prices, eased further in May to 6.1 percent, from 6.6 percent in April, even lower than market consensus.
Most analysts and market watchers forecast inflation for the period to average 6.2 percent.
According to data from the Philippine Statistics Authority (PSA), this was the lowest inflation reading since June last year when it averaged 6.4 percent.
Inflation from that point forward consistently rose until it peaked at 8.7 percent in January this year but has since steadily decelerated. The Bangko Sentral ng Pilipinas forecast inflation this year to average no higher than 5.5 percent, itself a significant improvement from earlier forecast of 6 percent announced in April.
According to data, food prices in May have increased the least in eight months to only 7.4 percent compared to food inflation averaging 7.9 percent in April. Food accounts for around half of a basket of services and goods typically consumed by Filipinos in a month.
The five-month inflation rate now averages lower to 7.5 percent.
The BSP said the May inflation outturn of 6.1 percent proved within the BSP’s forecast range of 5.8 to 6.6 percent, consistent with the overall assessment that inflation will remain elevated over the near term before gradually decelerating back to target range in Q4 2023 in the absence of further supply-shocks.
It said the balance of risks to the inflation outlook for 2023 and 2024 remains tilted to the upside owing to persistent constraints in the supply of key food items, the potential impact of El Niño on food prices and utility rates, as well as the effects of possible additional adjustments in transportation fares and wages. The impact of a weaker-than-expected global economic recovery continues to be the primary downside risk to the outlook.
The BSP said the Monetary Board will review its assessment of the inflation and macroeconomic outlook in the monetary policy meeting on 22 June 2023 and stands ready to adjust the monetary policy stance as necessary to prevent the further broadening of price pressures as well as the emergence of additional second order effects.
The BSP also supports for the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation.
