The Bangko Sentral ng Pilipinas (BSP) has projected that inflation in May 2026 will range between 7.1 percent and 7.9 percent, primarily driven by elevated prices of rice, vegetables, and meat, as well as the continued depreciation of the Philippine peso against major currencies.
Offsetting Factors
The BSP noted that these upward price pressures were partially offset by recent reductions in domestic fuel prices, lower fish prices, and slightly lower electricity rates. These factors helped moderate the overall increase in consumer prices, preventing an even higher inflation rate.
MSMEs Remain Cautious
Despite these developments, micro, small, and medium enterprises (MSMEs) remain cautious amid sluggish economic activity, according to Rey Calooy, chairman of the Filipino-Cebuano Business Club (FilCeb).
“Many businesses continue to experience weaker sales as consumers limit spending because of inflation and the rising cost of basic goods,” Calooy said.
Economic Growth Below Expectations
Calooy noted that while the Philippine economy grew by 2.8 percent in the first quarter of 2026, the expansion remains below expectations and has yet to translate into stronger demand for many MSMEs. The growth rate, though positive, has not been sufficient to stimulate a broad-based recovery in consumer spending.
Rising Operating Costs
He added that businesses are also grappling with higher operating costs, including electricity, logistics, labor, and financing expenses, further squeezing profit margins. These cost pressures are compounding the challenges posed by weak demand.
Mixed Business Sentiment
Looking ahead, Calooy said business sentiment remains mixed, with entrepreneurs cautiously optimistic that economic activity will improve in the coming months. However, concerns persist over inflation, weak consumer purchasing power, global economic uncertainties, and the slow pace of investments.
Priorities for MSMEs
For MSMEs, Calooy said priorities should include strengthening cash flow management, improving operational efficiency, controlling costs, and exploring new markets and revenue streams.
“The business environment remains challenging, but opportunities still exist for enterprises that can adapt, innovate and remain competitive,” he said.
