Philippines: Inflation eases to 3.1% in May
MANILA, Philippines – Inflation eased to a four-month low of 3.1 percent in May from 3.4 percent in April amid slower price adjustments in both food and non-food commodities, the Philippine Statistics Authority (PSA) reported yesterday.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the latest inflation figure was within the central bank’s forecast range of 2.9 to 3.7 percent.
“The deceleration to 3.1 percent from April’s 3.4 percent was traced to slower increments in the prices of food, beverages and tobacco items,” he said.
This was the lowest since the consumer price index averaged 2.7 percent in January. Inflation in the first five months of the year averaged 3.1 percent, well within the two to four percent target set by the BSP.
“The inflation print further supports our view of manageable inflation that is expected to fall within the target range for this year and next,” he said.
Monetary authorities will closely monitor domestic and external developments ahead of the last rate-setting meeting of the outgoing BSP chief and Monetary Board chairman scheduled on June 22.
“The BSP will continue to monitor developments here and overseas that can potentially influence future inflation and consider these in our next policy meeting,” Tetangco said.
Based on its latest assessment, the BSP’s Monetary Board sees the consumer price index averaging 3.4 percent this year and three percent next year.
Data released by the PSA traced the decline in inflation to slower annual increments by various commodity groups led by food and non-alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; furnishing, household equipment, and routine maintenance of the house; health; communication; as well as recreation and culture.
The index for restaurant and miscellaneous goods and services moved up at a faster rate while the indices for housing, water, electricity, gas, and other fuels as well as education retained their previous month’s rates.
The annual gain of the food alone index slowed down to 3.8 percent in May from 4.3 percent in April.
ING Bank chief economist in Asia Tim Condon said inflation last month surprised on the downside.
“Both headline and core inflation undershot expectations in May… Underlying price pressures remain in the Philippines on the back of strong economic growth,” she said.
Economic managers still expect a gross domestic product (GDP) growth of between 6.5 and 7.5 percent this year as the expansion slowed down to 6.4 percent in the first quarter from 6.6 percent in the fourth quarter of last year.
The lower than expected inflation rate in May bodes well for the economy, according to the National Economic and Development Authority (NEDA).
NEDA said the 3.1 percent inflation rate registered in May will benefit the economy in the near term.
“This is lower than market expectations of 3.3 percent, and is within government’s target of 2.0-4.0 percent for 2017,” NEDA said.
Socioeconomic Planning Secretary Ernesto Pernia said the country’s overall economic outlook remains optimistic considering recently international and domestic developments.
“On the external front, growth prospects for the global economy have improved, and the expected recovery of international trade should provide ample supply of commodies to support domestic production,” Pernia said.
He added that, on the domestic front, neutral weather conditions are likely to prevail over potential recurrences of El Niño or La Niña, based on the latest outlook of PAGASA and the International Research Institute for Climate and Society.
“This could lead to increased production of agricultural products, especially palay and corn,” NEDA said. – With Catherine Talavera