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Inflation slows to 3.2% in May —PSA

After six months of deceleration, inflation picked up and was recorded at 3.2% in May, slower year-on-year but faster than the previous month, data released by the Philippine Statistics Authority (PSA) on Wednesday showed.

According to the PSA, inflation clocked in at 3.2% last month, slower than the 4.6% recorded in May 2018, but faster than the 3.0% registered in April this year.

The PSA press briefing was ongoing as of posting time.

This is the first pickup in inflation recorded in seven months, after deceleration started in October 2018.

"The main drivers in the uptrend of inflation in May 2019 were food an non-alcoholic beverages; and housing, water, electricity, gas, and other fuels," National Statistician Claire Dennis Mapa told reporters in Quezon City.

"These are the commodity groups which recorded higher inflation rates in May 2019, compared with their annual rates in April 2019," he added.

Inflation of the heavily-weighted food and non-alcoholic beverages index was recorded at 3.4%; and in housing, water, electricity, gas, and other fuels index at 3.3%.

Sought for comment, Rizal Commercial Banking Corp. lead economist Michael Ricafort said the slight uptick in year-on-year inflation may be attributed to the higher global oil prices in early May that led a series of local fuel price hikes.

"The peso was also weaker in the early part of May, with the US dollar/peso reaching a high of 52.70 levels a few days after the elections, as this may have caused some uptick in the prices of imports, before the peso sharply declining back to among the strongest levels in a year at a little over 52 in late May," Ricafort said.

El Niño drought may have also caused some uptick in food/agricultural prices, as well as prices of some products and services in Metro Manila affected by the water supply disruptions, but mitigated by increased rice imports with the Rice Tariffication Law and other non-monetary measures to increase food/rice supply to lower prices and better manage inflation since the latter part of 2018, Ricafort said.

Higher markups were recorded in the following food groups last month -- cereals, flours, cereal preparation, bread, pasta, and other bakery products (3.7%); fish (4.2%); fruits (4.2%); fruits (4.6%); vegetables (12.5%), and other food products (6.8%).

Meanwhile, the rice index fell by 0.7% while corn dropped 2.8%; and the milk, cheese, and egg index retained its annual rate at 2.6% from the previous month.

"For housing, water, electricity, gas, and other fuels, the primary contributors to the higher inflation in May 2019 were electricity," said Mapa.

In terms of geographical location, inflation was higher at the National Capital Region (NCR) with 3.4%, slower than the 4.9% in May 2018 but faster than the 3.1% in April this year.

In areas outside NCR, inflation accelerated by 3.1%, slower than the 4.6% in May 2018 versus the 3.0% in April 2019.

"The highest annual rate among the regions in areas outside NCR remained in MIMAROPA Region at 4.7% in May 2019," said Mapa, noting an acceleration from the 4.6% the same month last year.

"Meanwhile, the lowest inflation among the regions in areas outside NCR in May 2019 was observed in Region VII (Central Visayas) and Region IX (Zamboanga Peninsula), both at 1.5%," he added.

As inflation last month clocked in higher than expected, Union Bank chief economist Ruben Carlo Asuncion said this may be a signal that the Bangko Sentral ng Pilipinas will likely maintain key policy rates. —with Ted Cordero/KBK, GMA News