Inflation eases and remains below midpoint of target range in May

Latest reading: Inflation eased to 3.8% in May from April’s eight-month high of 4.1%. As a result, the reading remained below the midpoint of the Central Bank’s 2.5–7.5% target range for the 12th consecutive month, the longest stretch since 2010. Looking at the details of the release, price pressures for food and non-alcoholic beverages—which make up a third of the inflation basket—eased; the government released corn from its strategic grain reserve in late May, which should further contain inflation ahead. Meanwhile, cost rises for transport and housing were unchanged from April in May. Lower oil prices and subdued domestic demand and higher FX reserves bolstering the currency further depressed price growth. As a result, the trend pointed down, with annual average inflation easing to 3.6% in May (April: 3.7%). Finally, consumer prices rose 0.50% over the previous month in May, accelerating from the 0.30% rise logged in March.

Panelist insight: EIU analysts commented: “We forecast that prices will rise by an average of 4.6% in 2025 as a whole, but that year-end inflation will climb to 6%, boosted by lower interest rates and the impact of the global tariff war. This also takes into account a cloudier outlook for agriculture this year.”

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