Inflation still at 4.5% in May —PSA

Inflation or the rate of increase in the prices of goods and services posted another flat reading in May on the back of varying movements in the prices of commodities, the Philippine Statistics Authority (PSA) reported on Friday.

At a virtual press conference, PSA chief and National Statistician Claire Dennis Mapa said inflation was recorded at 4.5% in May, the same level posted in April and March but faster than 2.1% recorded in May 2020.

“Ang magkakaibang paggalaw ng presyo sa mga commodity groups nitong Mayo 2021 ay nagresulta sa magkaparehong antas ng inflation noong Abril 2021 [The mixed movements in the prices among commodity groups in May 2021 resulted in the same inflation print as April 2021],” Mapa said.

This brought the year-to-date inflation to 4.4%, still above the government’s target band of 2% to 4%. 

The May inflation figures fell within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 4% to 4.8%.

“The later 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,” BSP Governor Benjamin Diokno told reporters in a Viber group message.

“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.

The PSA chief said the annual growth rates in the indices of the following commodity groups moved up at faster pace in May:

• Clothing and footwear, 1.7% from 1.6%
• Housing, water, electricity, gas, and other fuels, 1.9% from 1.5%
• Furnishing, household equipment and routine maintenance of the house, 2.5% from 2.1%
• Health, 3.2% from 3.1%
• Restaurant and miscellaneous goods and services, 3.8% from 3.4%

The faster movements in the above commodity groups were offset by the slower increments recorded in the following commodity groups:

• Food and Non-Alcoholic Beverages, 4.6% from 4.8%
• Alcoholic Beverages and Tobacco, 11.8% from 12%
• Transport, 16.5% from 17.%

Meanwhile, the rest of commodity groups -- Communication, Education, and Recreation and Culture -- remained at their previous month’s annual growth rates.

The major contributor for last month’s inflation print was Food and Alcoholic Beverages with an inflation of 4.6% and a 39.5% share in the overall consumer price index.

The food groups that contributed largely to the Food and Non-Alcoholic Beverages are the following:

• Meat, such as pork, with 22.1% inflation same as April’s level
• Fsh, such as galunggong, with 7.8% from 6%
• Other cereals, flour, cereal preparation, bread, pasta and other bakery products with 1.8% inflation

Pork

Pork, which kept inflation afloat, is seen to stabilize and temper the overall rate in the coming months after the government adjusted tariff rates of the imported meat commodity to 10% in-quota and 20% for out-quota for the first three months; and 15% in-quota and 25% for out-quota for the remaining nine months.

The government also adjusted the minimum access volume (MAV) to 254,210 MT.

“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 said.

The second contributor to the overall inflation in May was Transport with 16.5% percent inflation and 29.8% share.

Tricycle fare with 38.8% inflation; petroleum and fuels with 33% inflation; and jeepney fare with 6.3% inflation are the major Transport inflation contributors.

Restaurant and Miscellaneous Goods and Services was the third major contributor in last month’s print with 3.8% inflation and a share of 10.7%.

Top contributors in the commodity group’s inflation last month were

meals with 4.3% inflation; articles for personal hygiene, such as alcohol with 2.9% inflation; and barbershop services with 11.3% inflation.

The Statistics agency said downtrends were still observed in the indices of rice and vegetables as their annual rates correspondingly declined further to -0.8% and -6.6%.

Similarly, the annual rate went down in the index of fruit at -1.1% during the month.

Inflation in NCR

Inflation in the National Capital Region (NCR) moved in contrast with the national trend as it slowed down to 3.6% in May from 3.7% in April.

Compared to May 2020’s 1.4%, the region’s inflation was faster year-on-year.

The index of recreation and culture in NCR continued to move downward as its annual rate fell further to -0.5% during the month.

Annual increments were slower in the indices of alcoholic beverages and tobacco at 10.2%; and transport, 13.8%.

On the other hand, annual hikes were higher in the indices of the following commodity groups:

• Food and non-alcoholic beverages, 5.1%
• Housing, water, electricity, gas, and other fuels, 0.7%
• Furnishing, household equipment and routine maintenance of the house, 1.2%
• Health, 3%
• Restaurant and miscellaneous goods and services, 2.4%

The rest of the commodity groups retained their previous month’s annual growth rates, according to the PSA.

Inflation outside NCR

Following the trend at the national level, inflation in areas outside NCR (AONCR) in May remained at 4.7% which was the inflation rate in the area since March.

Compare to May 2020’s 2.3% rate, inflation in AONCR was faster than a year earlier.

Among the regions in AONCR, Region V or Bicol Region still exhibited the highest inflation during the month at 7.5%. Meanwhile, the lowest inflation remained in Region VII or Central Visayas at 2.1%.

Inflation for bottom 30%

Inflation felt by the bottom 30% income households in the country decelerated further to 4.5% last month from 4.9% in April.

“Ang pangunahing dahilan ng pagbaba ng antas ng inflation para sa Bottom 30% Income Households nitong Mayo 2021 ay ang mas mabagal na paggalaw ng presyo ng Food and Non-Alcoholic Beverages na may 3.4% inflation at 84% share,” Mapa said.

(The main reason for the decline in the inflation rate for the Bottom 30% income households in May was the slower movements in the prices of Food and Non-Alcoholic Beverages with 3.4% inflation and 84% share.)   —KBK, GMA News