The low inflation of 1.3 percent in May 2025 will provide the Bangko Sentral ng Pilipinas room to further reduce key interest rates, it said Thursday.
“On balance the more manageable inflation outlook and the downside risks to domestic economic activity allow for a shift toward a more accommodative monetary policy stance,” the BSP said in a statement.
“Looking ahead, the BSP will continue to take a measured approach in deciding on further monetary easing. The BSP will remain data-dependent when it reassesses its monetary policy stance during the June 2025 monetary policy meeting,” it said.
Inflation rate eased to 1.3 percent in May 2025 from 1.4 percent in April, the Philippine Statistics Authority (PSA) said.
This was the lowest inflation rate since November 2019 at 1.2 percent, bringing the average inflation from January to May 2025 to 1.9 percent. In May 2024, the inflation rate was higher at 3.9 percent.
The BSP said the May 2025 inflation outturn is within its forecast range of 0.9 to 1.7 percent.
“The latest inflation outturn is consistent with the BSP’s assessment of a manageable inflation environment over the policy horizon with a downward revision in baseline inflation forecasts, aided primarily by the continued easing of commodity price pressures,” it said.
The policy-making Monetary Board in its last meeting in April 2025 reduced the overnight borrowing rate by 25 basis points to 5.5 percent.
“The downtrend in the overall inflation in May 2025 was primarily brought about by the slower annual increment in the index of housing, water, electricity, gas and other fuels at 2.3 percent in May 2025 from 2.9 percent in the previous month,” the PSA said.
Food inflation at the national level remained steady at 0.7 percent in May, unchanged from April, and significantly lower than the 6.1 percent recorded in May 2024.
