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Frontier Research Inflation Pre Data report - May

In Our Report

Price data released by the Department of Census and Statistics (DCS) for the first three weeks of May showed an increase in prices in many varieties of vegetables, fish and meats categories as well as an increase in rice prices. This comes on the back of price increases during the latter half of April, where the Food & Beverage (F&B) category saw a rise of 2.2% over the month.

Food prices are expected to see a significant rise this month due to supply issues resulting from inclement weather conditions experienced in recent weeks. May is generally a month used for cultivation activities as it falls in between the two main harvesting seasons, and has historically seen an uptick in food prices. Therefore, crop damage due to floods and landslides would further add to upward pressure on this category. The rise in prices, especially in vegetables, is expected to continue in the coming weeks as supplies are expected to remain weak.

Non-Food inflation is also expected to see an acceleration during May with revisions to VAT and NBT being implemented at the beginning of the month. We expect all categories to be impacted by this change, with more notable rises in Transport and Telecommunication categories, where lubricants and telecommunication services are now no longer exempt from NBT in addition to being subjected to a VAT increase to 15%.

Taking the above factors into account, headline inflation is expected to accelerate to 5.3% YOY in May from 3.1% in April. On a MOM basis, we estimate inflation to increase by 2.8%.