Prices of key consumer products continue to rise in May as inflation increased to 3.9 percent from 3.8 percent the previous month, data from the Philippine Statistics Authority (PSA) showed.
May’s reading is the fastest in four months and brings the national average inflation from January to May to 3.5 percent.
Core inflation, which excludes selected food and energy items, slowed down to 3.1 percent in May from 3.2 percent in the previous month.
Claire Dennis Mapa, national statistician and civil registrar general, said the uptrend in the overall inflation “was primarily influenced by the higher year-on-year increase in the index of the housing, water, electricity, gas and other fuels.”
“The faster annual growth of the transport index also contributed to the uptrend of the overall inflation. In contrast, food and non-alcoholic beverages and alcoholic beverages and tobacco indexes registered lower inflation rates during the month,” Mapa said.
Eli Remolona, Bangko Sentral ng Pilipinas (BSP) governor, said the May inflation of 3.9 percent is within the BSP’s forecast range of 3.7 to 4.5 percent.
“The inflation outturn is consistent with the BSP expectations that inflation could temporarily accelerate above the target range over the near term due to adverse weather conditions on domestic agricultural output and positive base effects,” Remolona said.
He, however, stressed the “BSP expects average inflation to return to the target range for full year 2024 and 2025.”
“The risks to the inflation outlook continue to lean toward the upside. Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and increase in global oil prices,” Remolona said.
“Looking ahead, the Monetary Board will consider the latest inflation outturn in its upcoming monetary policy meeting on June 27. The BSP also continues to support the National Government’s non-monetary measures to address supply-side pressures on prices and sustain the disinflation process,” the BSP chief said.
Top contributors
Mapa said the indexes of clothing and footwear; health; recreation, sport and culture; restaurants and accommodation services; and personal care, and miscellaneous goods and services also registered lower increases, adding that the top three commodity groups contributing to the May overall inflation were food and non-alcoholic beverages; restaurants and accommodation services and transport.
“Food inflation at the national level slowed down to 6.1 percent in May 2024 from 6.3 percent in April. In May 2023, food inflation was higher at 7.5 percent,” Mapa said.
He said the deceleration of food inflation in May was mainly brought about by the slower year-on-year increase in vegetables, tubers, plantains, cooking bananas and pulses index.
This was followed by rice with a slower annual increase of 23 percent during the month from 23.9 percent in April. Fish and other seafood also contributed to the downtrend with zero percent inflation rate in May.
However, higher annual growth rates during the month were observed in the indices of meat and other parts of slaughtered land animals at 1.6 percent in May from 1 percent in the previous month.
“Food inflation shared 55 percent or 2.1 percentage points to the overall inflation in May 2024. The top three food groups in terms of contribution to the food inflation during the month were cereals and cereal products; meat and other parts of slaughtered land animals; ready-made food and other food products,” Mapa said.
Efforts stepped up
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the national government is “continuously stepping up efforts against persistent inflation drivers.”
“The government will continue to implement lasting policy reforms to ensure we address the drivers of food and non-food inflation sustainably. We want to maintain a macroeconomic environment conducive to investment and high-quality job creation – an environment that would allow us to hit the Marcos Administration’s development targets by 2028,” Balisacan said.
“To help manage food inflation, promote policy stability and investment planning, and enhance food security, the NEDA Board has agreed to reduce the rice duty rate to 15 percent from 35 percent for both in-quota and out-quota imports until 2028,” he added.
Balisacan said the NEDA Board also approved the extension until 2028 of the reduced tariff rates on corn, pork and mechanically deboned meat under Executive Order No. 50, s. 2023.
“The NEDA Board approved the new Comprehensive Tariff Program for 2024-2028, a strategic move to ensure access and affordability to essential commodities while balancing the interests of consumers, local producers, and the economy. At the same time, we recognize the need to help our farmers by modernizing our agricultural sector,” he said.
Balisacan further emphasized that one of the Marcos administration’s priorities is to raise productivity so that the country can sustainably reduce food prices and shield consumers and the economy from the price volatility of food commodities in the global market.
“On the part of the Executive, we will continue to find supply-side solutions to help manage the price increases of other commodities and keep inflation within the target range in the months to come,” he said.
Also, to mitigate the impact of elevated food prices on the poor and vulnerable sector, the Department of Social Welfare and Development and relevant agencies are set to implement the Food Stamp Program nationwide in July.
This program expects to cover one million households by 2027 from the initial 300,000 families in 10 regions.
In the regions
Inflation in the National Capital Region (NCR) accelerated to 3.1 percent in May from 2.8 percent in the previous month. The main driver to the increase of inflation rate in the area was the higher annual increment in the heavily-weighted food and non-alcoholic beverages and the faster annual growth rate of housing, water, electricity, gas and other fuels index.
Inflation in areas outside NCR was observed at 4.1 percent in May, the same annual rate recorded in April. Higher annual increases were observed in the indices of housing, water, electricity, gas and other fuels; transport; and information and communication.
PSA said five regions in areas outside NCR exhibited higher inflation rates in May, with Bangsamoro Autonomous Region in Muslim Mindanao remaining as the region with the highest inflation rate for the fourth consecutive month at 5.9 percent, while Region I (Ilocos Region) still registered the lowest inflation for the fifth consecutive month at 2.3 percent.
