Inflation rate eased to 1.6 percent in May, the slowest in 20 years, on ample supply of food and stable costs of fuel and electricity, the Philippine Statistics Authority said Friday.
Data from the PSA showed inflation rate decelerated from 2.2 percent in March and 4.5 percent in same period last year.
“Using the current base year 2006, the May 2015 inflation rate is the lowest [in 20 years], covering the monthly inflation series from 1995 to May 2015,” National Economic and Development Authority officer-in-charge and deputy director Rolandao Tungpalan said.
This pulled down the average inflation rate in the first five months to 2.2 percent, near the low end of the government’s target range of 2 percent to 4 percent for 2015.
Core inflation, which excludes selected volatile food and energy prices, also slowed to 2.2 percent in May from 2.5 percent in April and 3.1 percent in May 2014. Core inflation in the first five months of 2015 averaged 2.5 percent.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the May inflation rate fell within the inflation forecast for the month of 1.6 percent to 2.4 percent.
“Inflation expectations continue to be well-anchored, and growth is still sound [solid],” Tetangco said in a text message to reporters on Friday.
“We nevertheless remain watchful of developments, particularly in oil price movements, as these have knock-on effects on domestic pump prices, transport and other utilities, and consumption in general, as well as the impact of a possibly pro-longed El Nino on the food supply chain,” Tetangco said.
Hongkong and Shanghai Banking Corp. economist Trinh Nguyen said Bangko Sentral’s Monetary Board was not expected to touch the policy rates this year.
We believe the BSP will see through the CPI and growth slowdown and keep policy rates on hold. As we have stated in the previous data notes, the central bank may opt for more effective policy tools, such as the exchange rate, she said.
Tungpalan said the ample supply of rice helped bring down inflation rate in May. è¿ice prices have normalized, as total rice stocks inventory grew by 16.5 percent year-on-year as of April 2015. With favorable weather conditions, the supply of fish has been steady and sufficient and the volume of in-season fruits in the market stable, he said.
Tungpalan said the peso was expected to remain relatively stable and would contribute to stable prices going forward.
He said despite the latest inflation figure, there remained risks to inflation such as a prolonged El Niño dry spell that could affect harvests.