Inflation slows down further to 2.1% in May

Inflation continued its downtrend in May on the back of lower transportation prices during the month, the Philippine Statistics Authority (PSA) reported Friday.

Data released by the PSA showed inflation rate clocked in at 2.1% last month. This is slower than the 2.2% recorded in April and 3.2% in May 2019.

This is also the slowest in six months since inflation was recorded at 1.3% in November 2019.

The May inflation figures brought the year-to-date rate for 2020 at 2.5%.

“Contributing the the downtrend in the headline inflation in May 2020 was the annual decrease of the Transport index,” the PSA said.

The slower annual rate in the Food and Non-Alcoholic Beverages index also pushed down the overall inflation in May, it added.

In a separate statement, the Bangko Sentral ng Pilipinas said the May 2020 inflation of 2.1% was within its forecast range of 1.9 – 2.7%.

The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation is expected to remain benign over the policy horizon due largely to the potential adverse impact of COVID-19 on the domestic and global economic environment, according to the central bank.

“Contributing the the downtrend in the headline inflation in May 2020 was the annual decrease of the Transport index,” the PSA said.

The Transport index registered a 5.6% annual drop.

To recall, the government’s imposition strict quarantine measures from March 17 to May 31 to contain the spread of COVID-19 restricted movement of people and banned public transportation.

The slower annual rate in the Food and Non-Alcoholic Beverages index at 2.9% also pushed down the overall inflation in May, it added.

Annual decreases were noted in the indices of rice at 2.7%; corn, 0.7%; and sugar, jam, honey, chocolate and confectionery,  0.8%.

The indices of other food groups also exhibited slower annual increments during the month, except for the indices of other cereals, flour, cereal preparation, bread, pasta and other bakery products; and oils and fats, whose annual growth rates were higher at 2.7% and 2.1%, respectively, according to the PSA.

The downtrend in inflation was also brought about by the deceleration in the annual increments recorded in the indices of the following commodity groups during the month:

• Clothing and footwear, 2.4%
• Furnishing, household equipment and routine maintenance of the house, 4.1%
• Recreation and culture, 1.4%

Inflation in the National Capital Region (NCR), meanwhile, was higher at 1.4% in May than in the previous month which posted at 1.2%.

In May 2019, inflation in NCR was at 3.4%.

“The transport index registered a slower annual decline of 1.8% in May 2020 than its annual drop in the previous month of 6.5%,” the PSA said.

“On the other hand, annual gains decelerated for food and non-alcoholic beverages at 2.7%; alcoholic beverages and tobacco,13.8%; and recreation and culture, 0.6%,” it said.

In areas outside NCR (AONCR), inflation eased further to 2.2% in May. Inflation in AONCR was recorded at  2.5 percent in the previous month and 3.1 percent in May 2019.

Contributing to the downtrend in the inflation in the area during the month was the 6.8% annual drop in the transport index.

In addition, annual hikes decelerated in the indices of the following commodity groups:

• Food and non-alcoholic beverages, 3.1%
• Clothing and footwear, 2.8%
• Housing, water, electricity, gas, and other fuels, 0.9%
• Furnishing, household equipment and routine maintenance of the house, 3.6%
• Recreation and culture, 1.6%

The BSP said that inflation for the whole of 2020 and 2020 will likely settle below the mid-point of the government’s target range of 3.0 percent ± 1.0 percentage point. --KBK, GMA News