Inflation rate accelerated further to 3.9% in May —PSA

Prices of consumer goods and services in the Philippines continued its acceleration streak for the fourth straight month in May, amid faster increase in utility and transportation costs during the period, the Philippine Statistics Authority (PSA) reported on Wednesday.

At a press conference, National Statistician and PSA chief Claire Dennis Mapa said inflation — the rate of increase in the prices of goods and services — rose to 3.9% in May, a slight increment from the 3.8% rate in April.

This was the fastest inflation reading so far this year and also the fastest in six months when the inflation rate clocked in at 4.1% in November 2023.

May’s print is slower compared to the 6.1% rate recorded in May 2023.

Last month’s inflation print brought the year-to-date inflation rate to 3.5%, still within the government’s target band of 2% to 4%. It also fell within the Bangko Sentral ng Pilipinas’ (BSP) projection range of 3.7% to 4.5%

The BSP, in a separate statement, said it expects average inflation to return to the target range for full year 2024 and 2025.

“The risks to the inflation outlook continue to lean toward the upside. Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and increase in global oil prices,” the central bank said.

Contributors

“Ang pangunahing dahilan ng mas mataas na antas ng inflation nitong Mayo 2024 kaysa noong Abril 2024 ay ang mas mabilis na pagtaas ng presyo ng Housing, Water, Electricity, Gas and Other Fuels sa antas na 0.9%. Ito ay may 56.8% share sa pagtaas ng pangkalahatang inflation sa bansa,” Mapa said.

(The primary reason for the faster inflation rate in May 2024 versus April 2024 was the faster increase in the prices of Housing, Water, Electricity, Gas and Other Fuels with 0.9% rate from 0.4%. This had a 56.8% share in the increase in the overall inflation rate in the country.)

In particular, liquefied petroleum gas (LPG) prices saw an uptick to 9.% from 8.3% month-on-month while electricity saw a decrease to -8.5% from -11% in April.

The second commodity group that contributed to the faster May inflation print was Transport with a 3.5% rate from 2.6% month-on-month, and a share of 43.2% in the overall inflation acceleration during the month.

“Ang nag-ambag ng malaki sa pagtaas ng inflation ng Transport ay ang mas mabilis na pagtaas ng presyo ng mga gasolina, na may 5.2% inflation; at diesel, na may 7.2% inflation,” Mapa said.

(Major contributors to the increase in Transport inflation were the faster increase in the prices of gasoline at 5.2% from 3.4% and diesel at 7.2% from 4.2%.)

Also adding pressure to the Transport index was the increase in passenger transport by sea to 1.5% from -23.3%.

Food inflation

Food inflation, which tracks the movement of food items in a “basket” commonly purchased by households, slowed down to 6.1% in May from 6.3% in April.

The slower food inflation in last month was mainly brought about by the slower year-on-year increase in vegetables, tubers, plantains, cooking bananas and pulses index at 2.7% from 4.3% in the previous month. 

This was followed by rice which slowed to 23% from 23.9% in April. 

Fish and other seafood also contributed to the downtrend with 0% inflation rate in May from 0.4% in the prior month.

Higher growth rates, however, were seen in the meat prices at 1.6% from 1% month-on-month; while ready-made foods and other food products rose to5.3% from 4.8% in April.

“The government will continue to implement lasting policy reforms to ensure we address the drivers of food and non-food inflation sustainably. We want to maintain a macroeconomic environment conducive to investment and high-quality job creation — an environment that would allow us to hit the Marcos Administration’s development targets by 2028,” said National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan.   

“To help manage food inflation, promote policy stability and investment planning, and enhance food security, the NEDA Board has agreed to reduce the rice duty rate to 15 percent from 35 percent for both in-quota and out-quota imports until 2028,” said Balisacan.

The NEDA Board, chaired by the President, also approved the extension until 2028 of the reduced tariff rates on corn, pork, and mechanically deboned meat under Executive Order No. 50, s. 2023. 

“The NEDA Board approved the new Comprehensive Tariff Program for 2024-2028, a strategic move to ensure access and affordability to essential commodities while balancing the interests of consumers, local producers, and the economy. At the same time, we recognize the need to help our farmers by modernizing our agricultural sector,” the NEDA chief said. 

Inflation in and outside NCR

Inflation in the National Capital Region (NCR) increased to 3.5% from 2.8% in April due to faster increase in Food and Non-Alcoholic Beverages at 4.4% from 3.8% month-on-month.

Likewise, the faster growth rate of Housing, Water, Electricity, Gas and Other Fuels index at 1.9% in May from 1.4% in the previous month also contributed to the uptrend of the overall inflation in the area. 

For areas outside Metro Manila, the inflation rate stood at 4.1%, unchanged from its level seen in April.

The Bangsamoro Autonomous Region in Muslim Mindanao remained as the region with the highest inflation rate for the fourth consecutive month at 5.9% in May 2024, while Region I (Ilocos Region) registered the lowest inflation for the fifth consecutive month at 2.3%.

Inflation for bottom 30%

Meanwhile, the inflation rate felt by the bottom 30% income households in the country remained at 5.3% in May, slower than the 6.7% rate in May last year.

Transport index for the income group saw an increment to 3.5% from 2.%.

Housing, Water, Electricity, Gas and Other Fuels index for the bottom 30% income class declined to 0.7% from 1.8% month-on-month.

Food inflation for the income group, likewise, slowed down to 8.2% from 8.5% in April.

“On the part of the Executive, we will continue to find supply-side solutions to help manage the price increases of other commodities and keep inflation within the target range in the months to come,” said Baliscan.

The NEDA chief added that to mitigate the impact of elevated food prices on the poor and vulnerable sector, the Department of Social Welfare and Development and relevant agencies are set to fully implement the Food Stamp Program nationwide in July. 

“This program expects to cover one million households by 2027 from the initial 300,000 families in 10 regions,” said Baliscan. —KBK, GMA Integrated News