Further slowdown in inflation seen in May

MANILA  -The rate of increase in the prices of basic goods and services most likely receded for the fourth month in a row and settled within the range of 5.8 percent to 6.6 percent in May, according to the Bangko Sentral ng Pilipinas (BSP).

The midpoint of the BSP’s “nowcast” range, 6.2 percent, suggests that the central bank expects inflation to have decelerated from the 6.6-percent print in April.

Inflation has been slowing down every month since reaching 8.7 percent in January. The Philippine Statistics Authority will announce the official readout for May on June 6.

“The cumulative rollback in domestic petroleum prices as well as lower poultry and fish prices and electricity rates of various regional power distributors could lead to lower inflation in May,” the BSP said in a statement.

More expensive rice

The BSP added that, on the other hand, higher prices of rice, vegetables and other key food items as well as the increase in liquefied petroleum gas and Manila Electric Co.’s electricity rates are the primary sources of upward price pressures in May.

READ:  Philippine inflation eased further to 6.6% in April

So far, from January to April, inflation averaged at 7.9 percent.

Mike Enriquez, president and chief investment officer of Sun Life Investment Management and Trust Co., said in a press briefing they expect the full-year average in 2023 to settle at 5 percent. This is slower than the 5.8 percent recorded in 2022.

“The deceleration in monthly changes of the consumer price index is more stable now [as] commodity prices are coming off from highs,” Enriquez said.

“But climate-related factors like a weak El Niño are a risk (to the outlook of slowing inflation) and the early importation of rice, grains and livestock could mitigate this,” he added.

Water supply

Meanwhile, the Philippine Disaster Resilience Foundation (PDRF) is rallying private sector groups around efforts to prepare for and mitigate the potential impacts of El Niño, especially on water supply.

READ: Maynilad, Manila Water urged to gear up for water crisis

The Philippine Atmospheric Geophysical and Astronomical Services Administration believes that the phenomenon that brings less than usual rainfall and even drought to the Philippines is likely to develop by May to July this year and last until the first quarter of 2024.

“Metro Manila has grown tremendously over the years and yet its sources of water have not changed a great deal so any significant variation in the weather or any failure of equipment can lead to widespread interruptions,” PDRF president Butch Meily said. “I hope that someday, our children will finally enjoy an adequate supply of clean running water.”