Inflation remained weak at 2.6% in May

Customers buy vegetables in a Manila market in this file photo. Consumer prices remained tame in May despite a robustly growing economy, with the government optimistic that the favorable combination of modest inflation and brisk economic expansion will be sustained. AFP FILE PHOTO

Consumer prices remained tame in May despite a robustly growing economy, with the government optimistic that the favorable combination of modest inflation and brisk economic expansion will be sustained.

The annual inflation rate stayed at 2.6 percent in May, the same as that in April. This brought the average for the first five months of the year to 3 percent, the National Statistics Office reported on Wednesday.

The five-month average hit the low end of the government’s official target range of 3 to 5 percent for this year and 2014.

The inflation rate for May was more benign than the 2.9 percent recorded in the same month last year.

Economic Planning Secretary Arsenio Balisacan said the annual rate of increase in food prices slightly accelerated in May, but this was offset by the slowdown in the price increases of other commodity prices.

Data from the NSO showed that the inflation rate for food and non-alcoholic beverages stood at 2.4 percent in May from 2.2 percent in April. Similarly, inflation for housing and utilities accelerated to 1.5 percent from 1.2 percent.

Meantime, price increases for alcoholic beverages, tobacco and narcotics slowed down to 31.1 percent from 31.4 percent; clothing and footwear to 3.5 percent from 4.2 percent; furnishings, household equipment and routine house maintenance to 3.7 percent from 4 percent; health products and services to 2.7 percent from 3.1 percent; communications to 0.1 percent from 0.3 percent; recreation and culture to 1.7 percent from 1.8 percent; and restaurants, miscellaneous goods and other services to 2.3 percent from 2.7 percent.

The Philippines so far this year has registered the fastest economic growth rate in Asia at 7.8 percent year on year in the first quarter, surpassing China’s 7.7 percent.

A rapid expansion of an economy often elicits concerns of overheating and runaway inflation. But in the case of the Philippines, the government said the modest inflation was likely to stay even as the economy continued to expand at a fast pace.

The Bangko Sentral ng Pilipinas said the economy’s production capacity has expanded over the years, thereby helping boost the supply of goods and services. In turn, the growing supply is helping offset the impact on prices of increasing income and demand.

“Barring unforeseen developments, we expect inflation to be closer to the lower end of our target range of 3 to 5 percent over the policy horizon [that is, 12 to 18 months],” BSP Governor Amando Tetangco Jr. said.

Originally posted at 01:42 pm | Wednesday, June 05, 2013