Inflation slightly higher, still within target in May

INFLATION edged up in May as power, housing and utility costs grew at a faster pace, the Philippine Statistics Authority (PSA) reported on Wednesday.

At 3.9 percent, the result was marginally higher than April's 3.8 percent. It was lower than the 4.0-percent median in a Manila Times poll of economists, but fell within the Bangko Sentral ng Pilipinas' (BSP) 3.7- percent to 4.5-percent estimate for the month.

Core inflation, which strips out volatile food and energy items, decelerated to 3.1 percent from 3.2 percent.

Inflation, which has now risen for four straight months, has defied expectations of a breach of the 2.0- to 4.0-percent target, although the BSP warned that the outlook remained tilted toward the upside due to potential increases in food, transport, power and fuel costs.

«Looking ahead, the Monetary Board will consider the latest inflation outturn in its upcoming monetary policy meeting on 27 June 2024,» the central bank said in a statement.

«The BSP also continues to support the National Government's nonmonetary measures to address supply-side pressures on prices and sustain the disinflation process,» it added.

Average inflation remained within target at 3.5 percent. While the central bank still expects a breach moving forward, it said that full-year inflation was expected to be within target for 2024 and 2025.

Advertisement

Rice inflation drops

The PSA, in a statement, said May inflation was «primarily influenced by the higher year-on-year increase in the index of the housing, water, electricity, gas and other fuels at 0.9 percent during the month from 0.4 percent in April 2024.

Transport costs also rose, by 3.5 percent from 2.6 percent.

Food and alcoholic beverages still accounted for over half — a 56.6-percent share or 2.2 percentage points — of overall inflation.

Advertisement

Food inflation, meanwhile, slowed to 6.1 percent in May from the previous month's 6.3 percent.

Rice inflation, which contributed to the uptick in inflation from the previous months, declined to 23.0 percent last month from 23.9 percent in April.

The drop in food inflation was also driven by a slower year-on-year increase for vegetables, tubers, plantains, cooking bananas and