​May inflation at 4.5%

PHILIPPINES - In Brief 04 Jun 2021 by Romeo Bernardo
As expected, the headline inflation rate stayed at 4.5% in May, reflecting a 0.1% monthly increase in prices. Food prices fell 0.4% mom due mainly to continuing decline in vegetables, with meat prices likewise retreating marginally. The increase in non-food inflation may be traced to catering services (likely reflecting increased demand for food deliveries during quarantine) and electricity. We expect inflation to be on a downward path in the coming months. Some increases in electricity prices can be expected following the current shortage[1] although we are not expecting a sharp increase given price caps in the wholesale electricity market and the distribution utility’s limited reliance (around 10%) on the spot market for its required supply.CHART 1Contribution to mom inflationSource: PSA[1] Some big plants went on forced outage, taking out over 2000MW of supply from the system at a time of peak summer demand.

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