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4 June 2021
May 2021 Philippine Inflation at 4.5 Percent

Headline inflation remained at 4.5 percent year-on-year for the third consecutive month in May and was within the BSP’s monthly forecast range of 4.0-4.8 percent for the month. The resulting year-to-date average inflation rate of 4.4 percent was above the Government’s annual inflation target of 3.0 percent ± 1.0 percentage point for the year. Similarly, core inflation, which excludes selected volatile food and energy items to depict underlying demand-side price pressures, was also steady at 3.3 percent year-on-year in May, the same as in April. On a month-on-month seasonally adjusted basis, inflation also remained at 0.2 percent in May, unchanged from the previous month’s rate. 

Food inflation eased slightly in May as rice prices declined coinciding with the summer harvest season in most parts of the country. At the same time, ample domestic supply given favorable weather conditions also brought down year-on-year inflation for fruits and vegetables in May compared to the previous month. These developments, in turn, were enough to offset still elevated meat inflation. On the other hand, non-food inflation picked up as most major commodity groups registered either higher or unchanged inflation rates in May relative to the previous month’s reading. The increase in non-food inflation also reflects the impact of higher international oil prices on domestic petroleum products as shown in the uptick for the month-on-month inflation for electricity, gas, and other fuels as well as transport in May.

The latest outturn is consistent with expectations that inflation is likely to settle near the high-end of the target range in 2021 before reverting close to midpoint in 2022. Meanwhile, the BSP is of the view that risks to the inflation outlook are broadly balanced. The risks relate to the arrival of pork imports at lower tariffs, the successful safe reopening of the domestic economy, and the pace of the global economic recovery. The BSP remains watchful over the evolving economic conditions and challenges brought about by the pandemic to ensure that the monetary policy stance remains consistent with its price and financial stability objectives.
 
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Source: Bangko Sentral ng Pilipinas

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