Inflation Update: Price rise slows further, allows rate cuts  

Headline inflation continued to slow in May, bringing more reason for the Bangko Sentral ng Pilipinas (BSP) to further reduce rates in its next meeting this month.

Consumer prices rose 1.3% year-on-year in May, the slowest since November 2019, when inflation was recorded at 1.2%.

Key points

• Headline inflation slowed in May from 1.4% in April.
• Meanwhile, core inflation, which excludes select volatile food and energy items, registered at 2.2%, same as in April.
• Food inflation continues to move in mixed directions, with pork prices remaining the top contributor to headline inflation and rice prices sustaining its year-on-year decline.

Moving forward

• Metrobank maintains its full year 2025 inflation forecast of 2.2%, considering the sustained slowdown in price rise in recent months, the anticipated trajectory of rice inflation, and the impact of the BSP’s monetary easing on demand that could stoke prices.
• We also maintain our forecast of a cumulative 100 basis points worth of policy rate cuts from the BSP, which will bring the key policy rate down to 4.75% by end-2025