Inflation Preview: Meats and power drive a price spurt

Hitting protein targets became pricier in May.

We forecast inflation to pick up slightly to 1.5% in May, from the 1.4% surprise we saw in the preceding month.

Food prices propped up by meats

Despite the Department of Agriculture’s ongoing efforts to slow down the increase of pork prices through measures such as the maximum suggested retail price (SRP), costs for the commodity remain hard to tie down.

Meanwhile, the rise of beef, chicken, and fish prices also continued to quicken compared to last year.

Although prices of most food commodities rose higher compared to last year, rice prices continued to decrease even faster in May. Due to the heavy weight of rice in the consumer price index basket, lower prices will offset inflation for other food commodities.

Oil still low despite volatility

Oil price volatility softened in May, with pump price rollbacks in the first two weeks, and a large uptick in the middle of the month arising from the pause in US-China tariffs.

Even as prices rose due to reports of Israel planning strikes on Iran, this was offset toward the end of the month as OPEC+ began considering oil supply hikes for July. Price fluctuations throughout the month from uncertainty in America-Iran negotiations were kept at a minimum.

Given that price levels for oil are lower this month compared to one year ago, we expect oil to help moderate the inflation rate for May.

Sweating over electricity bills

Households still paid more to stay cool despite Meralco’s price adjustment, as electricity prices remain higher year-on-year even after the downward adjustment of rates.

Improved supply led to lower charges from the Wholesale Electricity Spot Market (WESM), while the appreciation of the peso translated to lower charges from Independent Power Producers (IPPs) and helped dampen higher charges from Power Supply Agreements (PSAs).

Metrobank’s take

Although supply side pressure continues to prop up prices of meats, downside pressure from other commodities will prove to be more than enough to offset higher prices. Headline inflation in May will continue to remain below the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% target, leaving enough room for a rate cut in the June 2025 Monetary Board meeting.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)

YOSHITAKA HIRAKAWA is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. He holds a Bachelor’s in Management Engineering from Ateneo de Manila University. With a background in data-driven decision making and quantitative methods, he aims to provide meaningful insights. Hungry for adventure, he constantly seeks new sights, sounds and experiences, from cliff jumping to trying new cuisines.

JOAQUIM PANTANOSAS is a Management Trainee under Metrobank’s Financial Markets Apprenticeship and Strategic Training (or FAST) Program. He is currently undergoing on-the-job training under the Research and Market Strategy Department of the bank. He holds a BS in Statistics from the University of the Philippines-Diliman, where he developed an interest in quantitative research as a tool for complex problem-solving. He enjoys a good laugh with the people he cares about.