Inflation slowed in May 2026, helped by lower fuel and food prices, but the Bangko Sentral ng Pilipinas (BSP) said persistent price pressures and rising inflation expectations continue to pose risks to the country's economic outlook.
In a statement released Friday, the BSP said inflation eased to 6.8 percent in May from 7.2 percent in April, coming in below both market expectations and the central bank's forecast range of 7.1 percent to 7.9 percent.
The central bank attributed the slowdown primarily to lower transport costs as domestic fuel prices continued to decline. Reduced prices of key food commodities, particularly rice, also helped temper overall inflation.
Despite the improvement, the BSP cautioned that inflation remains elevated and that developments in the Middle East could affect the outlook through potential impacts on global oil prices.
"The inflation environment continues to be challenging," the BSP said, noting that its latest projections show average headline inflation breaching the government's 2 to 4 percent target range in both 2026 and 2027.
The central bank also flagged rising inflation expectations, which could increase the risk of households and businesses adjusting their price and wage decisions based on expectations of sustained inflation.
According to the BSP, inflation expectations have risen further, raising concerns that they could become detached from the government's 3 percent inflation target amid persistent and broadening price pressures.
The Monetary Board is expected to reassess the country's macroeconomic outlook during its June 2026 policy meeting, taking into account the latest inflation data, first-quarter economic growth figures, and key domestic and international developments.
Market observers will closely watch the meeting for signals on the future direction of monetary policy as the BSP balances inflation control with support for economic growth.
While May's inflation reading offered some relief to consumers, the central bank signaled that it remains vigilant against upside risks that could keep price growth above target over the medium term. PR
