Inflation cools to 1.3% in May, slowest pace in nearly 6 years

The country’s inflation rate further eased to 1.3 percent in May from 1.4 percent in the previous month on the back of lower utility costs and slower price gains in restaurants and accommodation services.

This matched the median estimate of 13 economists polled by Inquirer last week. It also settled within the Bangko Sentral ng Pilipinas’ forecast range of 0.9 percent to 1.7 percent for May.

Inflation rates Philippines 24-25

The latest consumer price data also marked the slowest pace since November 2019, the Philippine Statistics Authority (PSA) reported on Thursday.

The index of housing, water, electricity, gas and other fuels eased to 2.3 percent from 2.9 percent in the previous month.

The restaurant and accommodation services index cooled to 2 percent during the month from 2.3 percent in April.

Overall, the latest reading landed below the lower-end of the official target range of 2 to 4 percent.

As it is, another month of benign inflation would support the ongoing easing cycle of the local central bank, which has so far trimmed the benchmark rate that banks typically use when pricing loans to 5.5 percent.

Source: Inquirer

Sari-sari store spending drops in 2024

Monthly spending in small mom-and-pop stores, known as sari-sari stores, fell to P689 in 2024, from the 2023 average of P781, according to tech startup Packworks, which offers apps to help store owners manage their businesses.

“Packworks’ data also showed that while Filipinos on average spent less, they visited sari-sari stores more frequently,” it said. “Last year, its network of stores recorded an average of 18 monthly transactions nationwide, up 16% from 2023,” it added.

It said the practice of tingi — the purchase of the smallest quantities possible — was apparent in the frequent visits, signaling that affordability issues are preventing consumers from buying more than they need at the moment.

“The combination of Filipinos’ smaller basket sizes and more frequent visits to sari-sari stores points to a preference for buying in smaller, more affordable portions — the essence of the tingi economy,” Packworks Chief Data Officer Andoy Montiel said.

“This behavior likely stems from consumers needing to stretch their budget further, even in a lower inflation environment. They might be opting to buy only what they immediately need, rather than larger quantities less frequently to stock up,” he added.

It added that the average monthly basket size has dwindled since Packworks started tracking the indicator in 2022.

“In 2022, the average basket size was P800, which decreased to P781 in 2023 and reached its lowest point last year. This is despite the country hitting a 3.2% year-to-date inflation rate in 2024, the lowest in four years,” it added.

Of the 1 million monthly sales transactions tracked by Packworks, the largest decrease in value was posted by Region I, or the Ilocos Region, where monthly spending fell 31% to P570.

Large declines were also seen in the National Capital Region and Region VIII, or the Eastern Visayas, which posted 28% and 25% declines monthly spending to P702 and P508, respectively.

Regions IV-A (Calabarzon) and IV-B (Mimaropa) recorded the biggest monthly basket sizes of P1,027 and P1,237, respectively. 

Last year, Region I turned in the highest number of monthly transactions at 26, followed by Region IX (Zamboanga Peninsula) with 25 and Region V (Bicol Region) with 20.

Packworks said seasoning and recipe mix items, detergent, powdered drinks, hygiene products, cigarettes, and liquor were the most commonly purchased items.

Source: Business World and Patchworks

Visitor arrivals of 6 million seen possible in 2025

The Philippines can hit visitor arrivals of 6 million this year, even with its key source markets roiled by currency volatility, Leechiu Property Consultants said.

“I think the Philippines can still book 6 million visitors by year’s end, but of course there are risks,” said Alfred Lay, director for hotels, tourism, and leisure at Leechiu.

“Risks for this year are all mainly external, namely the uncertainty in the global economy, airline disruptions, and exchange rate volatility in our top source markets, which can both have positive and adverse effects,” he added.

The Department of Tourism reported that the Philippines booked 5.95 million visitor arrivals last year, well off its target of 7.7 million.

Mastercard Chief Economist for Asia-Pacific David Mann said that inbound tourism to the Philippines is recovering slowly compared to the outbound segment of the business.

“We have seen outbound spending rise 6% versus 2019, with the majority traveling to Japan, Korea, and Vietnam,” Mr. Mann said in a virtual briefing on Thursday.

“The inbound recovery has been a bit slower, at less than three-quarters (72%) recovered to 2019 levels, likely due to some of the slower recovery in the air capacity and reliance on long-haul markets,” he added.

He noted the slowdown in arrivals from Northeast Asia but added that visitors from Singapore, the US, and Australia, as well as overseas Filipinos, have been helping support the recovery.

The Philippines recorded 2.1 million visitor arrivals as of May 1, down 0.82% year on year.

South Korea, the top source market, accounted for 22.25% of arrivals, or 468,337, down 18% from a year earlier.

The other top source markets were the US, Japan, Australia, and Canada.

“While the dip in South Korean arrivals is notable, it’s too early to call it a lasting trend,” Mr. Lay said.

“Encouragingly, we’re seeing steady growth from the US, Australia, Japan, and parts of Europe — markets showing healthy demand that can help offset the shortfall,” he said.

However, he said the decline in arrivals “highlights the ongoing need for both the private and public sectors to continue improving our infrastructure and services.”

“The regional market is very competitive, and we need to keep adding more focus, resources, and funding to our tourism sector to ensure we stay relevant,” he added.

He said the opportunities in Philippine tourism still lie mainly in the domestic market.

Source: Business World