May inflation steadies at 4.5%

The lower inflation in NCR was due to the slower increase in transport prices amid the sustained decline in tricycle fares.

The cost of local goods and services remained unchanged for three consecutive months in May, reflecting a stable inflation rate, the Philippine Statistics Authority (PSA) said on Friday. However, last month’s 4.5 percent headline inflation is still above the administration target of two to four percent.

Year-to-date, the average inflation is pegged at 4.4 percent, notably higher than the posted 2.5 percent in the first five months last year.

National statistician Claire Dennis Mapa pointed to food and non-alcoholic beverages as the main contributors to the elevated price increase, accelerating by 4.6 percent and 39.5 percent share to the overall basket.

The National Capital Region (NCR) inflation slowed slightly to 3.6 percent from April’s 3.7 percent.

According to Mapa, the lower inflation (in NCR) was due to the slower increase in transport prices amid the sustained decline in tricycle fares, which recorded 55.4 percent inflation from the 118.8 percent last month.

Meanwhile, the rate of price increase in areas outside Metro Manila was stable at 4.7 percent amid higher food prices such as meat and fish at 22 and 7.9 percent, respectively.

Within expectations

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno expressed satisfaction with last month’s inflation figure and said it would remain within their expected range.

“The latest outturn is consistent with expectations that inflation could remain above the high-end of the target range during the quarter as meat and oil prices remain elevated,” Diokno explained.

“Nonetheless, the BSP expects inflation to decelerate to within the target range by the second half of 2021 to 2022 as domestic supply bottlenecks are addressed,” he added.

To recall, the state’s top economic managers pegged their 2021 inflation target between 2 and 4 percent.

Still, the BSP chief said that inflation may exhibit a downward trend in the second half of the year and that risks to their outlook remain broadly balanced.

“The implementation of the temporary reduction in tariffs on imported pork is seen to address supply constraints and ease price pressures on meat products going forward,” Diokno said.

“Thus, the projected decline of inflation depends crucially on the timely arrival of pork to help stabilize domestic prices,” he added. Monetary pause to persist Nicholas Mapa, a senior economist at the ING Bank, said with the current developments, the BSP’s accommodative stance could hold out until the end of the year.