Fuel price cut to trim inflation by 1.64%

Inflation in May was 2.4 percent down from 2.5 percent in April due to a 0.6% drop in the Transport sub-index of the Consumer Price Index. The drop was due to an average 14.3 thebe drop in fuel prices effected in April.  Last Friday fuel and paraffin prices fell further by an average P1.58, the largest decrease in several years, with the BoB saying this would trigger even lower inflation in the short term.

The central bank had originally projected that inflation would return to the three to six percent target threshold by the fourth quarter of this year, but now expects this to happen in the third quarter of 2021. Inflation, which is the general increase in prices, has been below the target threshold since September 2019 and has not trended above four percent since November 2014.