Inflation down to 6.1% in May 2023, within BSP target range

Headline inflation continued to slow down for the fourth consecutive month in May 2023 to 6.1 percent from the 6.6 percent in April. The May inflation rate is within the Bangko Sentral ng Pilipinas (BSP)’s forecast range of 5.8 to 6.6 percent and equal to private analysts’ median estimate of 6.1 percent.

“This development marks the government’s sustained progress in its fight against inflation. We are on track to manage inflation to within target range sometime in the fourth quarter of this year, if not earlier, and near the midpoint of the 2 to 4 percent target by next year,” Finance Secretary and Economic Development Group (EDG) chair Benjamin E. Diokno said.

This sustained downtrend was primarily due to the lower contribution of Transport, followed by Food and non-alcoholic beverages, and Housing, water, electricity, gas, and other fuels to overall inflation.

The year-to-date (YTD) inflation was recorded at 7.5 percent, higher than the Development Budget Coordination Committee (DBCC)’s assumption of 5.0 to 7.0 percent for full year 2023.

Seasonally adjusted month-on-month (MoM) inflation increased to 0.3 percent in May 2023, from a zero percent monthly rate in the previous month.

The main contributors to headline inflation for the month of May are Food and non-alcoholic beverages contributing 2.8 percentage points (ppt); Housing, water, electricity, gas and other fuels (1.4 ppt); and Restaurants and accommodation services (0.8 ppt).

Food inflation continued to decelerate to 7.5 percent from 8.0 percent in the previous month, but still remains to have the largest contribution of 2.60 percentage points (ppt). The main contributors are vegetables (0.35 ppt), milk and other dairy products (0.35 ppt), flour (0.34 ppt), and sugar (0.33 ppt).

Meanwhile, top contributors to the non-food inflation are food and beverage serving services (0.78 ppt), actual rentals (0.73 ppt), passenger transport services (0.56 ppt), and electricity (0.48 ppt).

Core inflation, which excludes selected volatile food and energy items, slowed down to 7.7 percent in May 2023 from 7.9 percent in April, indicating tapering price pressures. This brings the average core inflation for the first five