Inflation in May 2023 reached 6.1 percent, falling within the projected range of 5.8 to 6.6 percent set by the Bangko Sentral ng Pilipinas (BSP). This outcome aligns with the BSP's overall assessment that inflation will remain elevated in the near term before gradually decelerating and returning to the target range by the fourth quarter of 2023, assuming no further supply shocks occur.

The inflation outlook for 2023 and 2024 still carries an upside risk due to persistent constraints in the supply of essential food items. Factors such as the potential impact of El Niño on food prices and utility rates, as well as potential adjustments in transportation fares and wages, also contribute to this upward risk. On the other hand, a weaker-than-expected global economic recovery remains the primary downside risk to the inflation outlook.

The Monetary Board is set to review its assessment of the inflation and macroeconomic outlook during the upcoming monetary policy meeting on June 22, 2023. The BSP emphasizes its readiness to adjust the monetary policy stance as needed to prevent the further expansion of price pressures and the emergence of additional second-order effects. Furthermore, the BSP supports the timely and effective implementation of non-monetary government measures aimed at mitigating the impact of persistent supply-side pressures on inflation.

With an eye on the medium-term inflation path, the BSP remains committed to employing appropriate measures to ensure price stability and promote sustainable economic growth.