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Philippines Inflation May 2024

Philippines: Inflation comes in at highest level since December 2023 in May

Inflation inched up to 3.9% in May from April’s 3.8%. May’s result marked the highest inflation rate since December 2023 and the fourth consecutive rise in price pressures. That said, the increase was softer than markets had anticipated. Looking at the details of the release, housing and utilities prices rose at a quicker pace in May compared to the previous month, while price pressures for food eased.

Annual average inflation fell to 4.3% in May (April: 4.5%).

Lastly, consumer prices increased a seasonally adjusted 0.34% in May over the previous month, accelerating from April’s 0.23% rise.

United Overseas Bank analysts Julia Goh and Loke Siew Ting commented on the outlook for inflation and interest rates:

“Headline inflation is expected to continue its uptrend at a gradual pace in the next two months before reversing course in late 3Q24 and settling within the central bank’s 2.0%-4.0% medium-term target range in 4Q24. This is largely due to the impact of extreme weather and base effects amid a continuation of nonmonetary intervention measures by the government. […] We stick to our view that the BSP will start its rate cut cycle (by 25bps to 6.25%) when there are significant signs of inflation moving sustainably down to its mid-point target. By then, the US Fed rate may have already confirmed its easing path too.”

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