May inflation stays low amid falling rice, oil prices

Some economists project that inflation last month remained low, settling between 1.2 and 1.4 percent, due largely to cheaper rice and fuel prices.

This minimum estimate is slightly higher than the 0.9 percent inflation forecast by the Bangko Sentral ng Pilipinas (BSP). The Central Bank anticipates overall inflation to accelerate to 1.7 percent, up from 1.4 percent in April, according to data from the Philippine Statistics Authority (PSA).

Rizal Commercial Banking Corp. chief economist Michael Ricafort said rice prices eased after the government imposed a maximum retail price of P45 per kilo on imported rice on 31 March.

The PSA reported that regular milled rice in local markets sold for a lower average price of P43.32 per kilo in late May.

"Better weather conditions helped increase agricultural production of vegetables such as carrots," Ricafort added.

Security Bank chief economist Angelo Taningco noted that May inflation should also reflect “lower oil prices and the peso appreciation against the US dollar.”

The Bankers Association of the Philippines reported that the peso appreciated by 0.19 percent against the US dollar over the past 30 days, reaching a peak of P55.35 per dollar.

"The peso remained strong for more than 14 months or since March 2024," Ricafort said.

Bloomberg data showed that global oil prices have also declined recently, with the United States’ WTI Crude Oil down by 0.25 percent and Europe’s Brent Crude falling by 0.90 percent.

“Global crude oil prices fluctuated to a high of $80.77 per barrel on January 15, 2025, but eased to four-year lows around $61 per barrel as of late May,” Ricafort said.

However, the PSA reported that prices of string beans, ginger, and Galunggong fish have risen recently.

Pork and meat prices remained high, averaging P335.37 per kilo, while cooking oil prices increased to P177.83 per liter.

"The lifting of the maximum suggested retail price for pork contributed to an uptick in meat prices during the month," Bank of the Philippine Islands chief economist Jun Neri said.

Looking ahead, Ricafort expects overall inflation rates to accelerate to around 2 percent from September to December, leading to roughly 2 percent full-year inflation.

Neri forecasts inflation to settle near 3 percent by year-end as “rice prices are expected to decline starting in September.”

Both projections remain below last year’s inflation rate of 3.2 percent.

PSA will announce the actual May inflation level on 5 June.