Inflation may climb further in May – BSP

Amid rising food costs, weaker peso

MANILA, Philippines — Inflation may have accelerated further in May and could have reached its fastest pace in more than three years, as higher food prices and a weaker peso continued to exert upward pressure on consumer prices, according to the Bangko Sentral ng Pilipinas (BSP).

In its month-ahead forecast, the BSP said inflation likely settled within a range of 7.1 to 7.9 percent in May.

At the upper end of the forecast range, inflation is expected to exceed the 7.2 percent recorded in April and mark the fastest print since the 8.6 percent in February 2023. It is also expected to be sharply higher than the 1.3 percent inflation posted in May 2025.

“Upside price pressures were driven by rising prices for rice, vegetables and meat as well as the depreciation of the peso,” the BSP said.

Latest data from the Department of Agriculture’s price monitoring showed that rice prices in Metro Manila remained elevated in the third week of May.

From May 18 to 23, local regular milled rice averaged P45.30 per kilo, while local well-milled rice was sold at an average of P49.99 per kilo. Local premium rice averaged P55.31 per kilo, while imported regular milled rice was cheaper at P42.50 per kilo.

Vegetable prices also remained high, particularly for several lowland and highland varieties. In markets in the National Capital Region, ampalaya averaged P120.88 per kilo, pole sitao P110.85, eggplant P89.02 and tomatoes P63.92.

Highland vegetables were more expensive, with green and red bell pepper averaging P244.14 and P245.60 per kilo, respectively, while carrots stood at P135.01, Baguio beans at P125.10 and lettuce ranged from P194.75 to P245.58 per kilo.

The peso’s weakness also likely added to inflation pressures in May by making imported goods, particularly fuel, food and raw materials, more expensive. The local currency traded mostly at the 61-per-dollar level during the month, even sinking to a fresh record low of 61.75 on May 19.

However, the BSP said the recent rollbacks in domestic fuel prices, lower fish prices and slightly lower electricity rates “partially offset the prevailing upside price pressures.”

RCBC chief economist Michael Ricafort expects May inflation to reach at least eight percent, above the BSP’s forecast range. It could also continue to accelerate in the coming months due to second-round effects from higher fuel prices, a weaker peso and higher prices of other goods and services.

For the full year, he expects inflation to average 6.5 to 7.5 percent. In the event of a prolonged conflict in the Middle East, he said inflation could settle at around six to seven percent, or even higher.

“If the inflation rate consistently breaches above the two to four percent target in the coming months, the BSP would likely raise rates in an effort to bring inflation back to the said target range, to fulfill its mandate of price stability,” Ricafort said.