Philippine CPI rises for fourth straight month in May

A day before New Year's Eve, individuals browse through aisles as they shop for Media Noche items at a grocery store in Quezon City on Friday, Dec. 30, 2022 (The Philippine STAR/Miguel De Guzman)
  • May inflation fastest since Nov 2023
  • Uptick in utility and transport costs push inflation higher
  • May inflation in line with cbank expectations

Philippine annual inflation PHCPI=ECI quickened for a fourth straight month in May due largely to the faster pace of increases in housing, utility and transport costs, the statistics agency said on Wednesday.

READ: BSP says inflation average to return to target in 2024, 2025 | Philippine annual inflation at 3.9% in May

The consumer price index rose 3.9% in May from 3.8% the previous month, marking the fastest rise since November 2023, bringing the five-month average inflation to 3.5%, well inside the central bank’s 2.0%-4.0% target for the year.

Economists in a Reuters poll had forecast annual inflation at 4.0%.

The Bangko Sentral ng Pilipinas (BSP) said last month’s data was consistent with its expectations that inflation could accelerate over the near term due to the impact of adverse weather conditions on farm output.

Core inflation, which strips out volatile food and energy prices, eased to 3.1% in May from 3.2% the prior month.

BSP Governor Eli Remolona reiterated on Tuesday the benchmark policy rate PHCBIR=ECI, currently at a 17-year high of 6.50%, could be cut before the U.S. Federal Reserve starts it easing cycle.

But Ruben Carlo Asuncion, chief economist at Manila-based Union Bank, believed the BSP would still prefer to wait for the Fed to move before it does to prevent the peso, down more than 5% against the dollar so far this year, from weakening too much.

“They may have to prioritize interest rate differentials over the speed of cuts,” Asuncion said in a phone message.

The Philippine central bank, which kept its benchmark rate steady at its last five meetings, has said it was looking to cut rates by 25 basis points as early as August and by another 25 basis points in the fourth quarter.

Its next meeting is on June 27.

— Reporting by Mikhail Flores and Neil Jerome Morales; Editing by Himani Sarkar and Stephen Coates