February 3, 2023

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May inflation likely surged past 5%

2 min read

By Keisha B. Ta-asan

INFLATION likely surged past 5% in May as food and oil prices continued to climb amid tight global supply, according to analysts.

A BusinessWorld poll of 16 analysts yielded a median estimate of 5.4% for May inflation, matching the midpoint of the 5-5.8% forecast by the Bangko Sentral ng Pilipinas (BSP).

If realized, this would be the quickest since the 6.1% print in November 2018. It would also be faster than the 4.9% print seen in April and 4.1% in May 2021.

This would also exceed the BSP’s 2-4% target band and the Development Budget Coordination Committee’s inflation rate assumption of 3.7-4.7% this year. 

The Philippine Statistics Authority (PSA) will release the May consumer price index (CPI) data on Tuesday.

“Crude oil prices continue to rise and its effects are spreading to other consumer goods and services,” Victor A. Abola, economist at the University of Asia and the Pacific, said.

Since Russia invaded Ukraine in late February, crude oil prices have surged to above $100 per barrel amid concerns over supply.

Data from the Department of Energy (DoE) showed that gasoline, diesel, and kerosene prices have jumped by P23.85 per liter, P30.30 per liter, and P27.65 per liter, respectively, year to date as of May 31.

“Sources of second-round inflation effects include higher wages, possible hikes in transport fares that could lead to higher prices of other affected goods and services in the economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Wage hikes in 14 regions will take effect this month, while transport groups have filed petitions to raise fares.

“Food, transport and utility costs will be the main drivers for this month’s breach of the inflation target. Supply chain issues have forced up production costs from everything from bread, to fish and vegetables,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

The Russia-Ukraine war, as well as the lockdowns…


2022-06-05 12:34:43

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