Inflation steady in May, Bangko Sentral on the lookout

Inflation in May was steady as the slower rise in the costs of most goods offset increases in food and beverage prices, the National Statistics Office (NSO) reported on Wednesday.

Despite benign inflation, monetary authorities signal readiness to tweak policy in order to keep consumer prices in check.

In a statement, the NSO said, "The Philippines’ year-on-year headline inflation remained at its previous month’s rate of 2.6 percent."

Last month's inflation number fell within the Bangko Sentral ng Pilipinas's 2.2 to 3.1 percent projection and is slightly below the 2.65 percent median forecast in a GMA News Online poll of analysts.

Inflation in May last year was at 2.9 percent.

"The stable general inflation rate in May 2013 relative to the previous month was a result of the slower price increases of major commodity groups counterbalancing the higher growth in prices of selected food items and lower cutbacks in domestic petroleum prices," Socioeconomic Planning Secretary Arsenio Balisacan said in a separate statement.

The NSO said  increases in the prices of seven other commodity groups dampened inflation despite pick-up in index heavyweights food and non-alcoholic beverages.

The transport costs contracted while the price of education-related goods was steady from a month ago, it added.

The latest inflation figure pulled the rise in consumer prices in the first five months of the year to 3 percent, at the lower end of the Bangko Sentral's 3 to 5 percent target for the year.

Central bank officials forecast full-year 2013 inflation to average at 3.2 percent.

Bangko Sentral Governor Amando Tetangco, Jr. said monetary authorities are on the watch for price pressures and will tweak policy as needed.

"We remain mindful of local and global developments, including pending petitions for power rate adjustments and shifts in capital flows and market sentiment that could impact financial and real asset prices going forward," Tetangco said in a text message to reporters Wednesday.

"BSP has policy space to address inflation pressures from these impulses, and is ready to make policy adjustments as needed," he said.