May Inflation Rises to 3.9 Percent

Headline inflation increased to 3.9 percent year-on-year in May from 3.8 percent in April.

This is within the BSP's forecast range of 3.7 – 4.5 percent for the month. The resulting year-to-date average of 3.5 percent was within the Government's inflation target range of 3.0 percent ± 1.0 percentage point for the year. On a month-on-month seasonally adjusted basis, headline inflation rose to 0.3 percent in May from 0.2 percent in the previous month. Meanwhile, core inflation, which excludes selected volatile food and energy items and measures underlying demand-side price pressures, eased further to 3.1 percent year-on-year in May from 3.2 percent in April.

Headline inflation rose as non-food inflation increased owing to higher electricity rates and an uptick in transport inflation. Meanwhile, year-on-year food inflation eased but remained elevated in May, given double-digit rice inflation.

The latest inflation outturn is consistent with the BSP's projections that inflation is likely to exceed the target range temporarily due to the possible impact of adverse weather conditions on domestic agricultural output as well as positive base effects. Nonetheless, the BSP expects full-year average inflation to settle within the target range for 2024 and 2025. Looking ahead, the Monetary Board will consider the latest inflation outturn along with other incoming data in its upcoming monetary policy meeting on 27 June 2024.