Inflation rate in May softened to a four-month low of 3.1 percent from 3.4 percent in April, on slower increases in prices of food, beverage and tobacco items, the Philippine Statistics Authority said Tuesday.
The May inflation, however, was faster than 1.6 percent registered a year ago, data showed.
Inflation in the first five months averaged 3.2 percent, slightly higher than the midpoint of the target range of 2 percent to 4 percent this year.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the actual May inflation rate was within its forecast range of 2.9 percent to 3.4 percent for the month.
“The inflation print further supports our view of manageable inflation that is expected to fall within the target range for this year and next. 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 in a statement.
The PSA said slower annual increments in May were posted in different commodity groups such as food and non-alcoholic beverages (3.8 percent); alcoholic beverages and tobacco (6.1 percent); clothing and footwear (2.2 percent); furnishing, household equipment and routine maintenance of the house (2.3 percent); health (2.4 percent); transport (2.7 percent); communication (0.2 percent); and recreation and culture (1.4 percent).
ING Bank chief economist in Asia Tim Condon said in a comment that a high base effect had kicked in in the food component for the month.
“We expect it to be a source of disinflation for the rest of the year. We also think the oil price-driven increases in the utilities and transport components have peaked,” Condon said.
National Economic and Development Authority director-general and Socioeconomic Planning Secretary Ernesto Pernia said the slower May inflation rate boded well for the economy in the near term.
“These trends bear watching, given the significant impact of food prices on the poor. The amendment of domestic laws to reflect the expiry of the WTO waiver on rice quotas should also be pursued,” said Pernia.
Pernia said that overall economic outlook remained optimistic considering recent 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 commodities to support domestic production,” Pernia said.