The Bangko Sentral ng Pilipinas (BSP) projects that inflation in May 2026 will settle between 7.1 percent and 7.9 percent, primarily fueled by rising costs of rice, vegetables, and meat, as well as the continued depreciation of the Philippine peso. The central bank noted that these upward price pressures were partially mitigated by recent reductions in domestic fuel prices, lower fish prices, and slightly decreased electricity rates, which helped temper the overall increase in consumer prices.
MSMEs Remain Cautious
Despite these developments, micro, small, and medium enterprises (MSMEs) continue to exercise caution 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 stated. He 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.
Calooy added that businesses are also grappling with higher operating costs, including electricity, logistics, labor, and financing expenses, further squeezing profit margins. Looking ahead, he 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 emphasized that 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. The BSP's inflation forecast underscores the ongoing economic pressures facing both consumers and businesses in the Philippines.
