May inflation rate rises to 3.2% after 6-month slowdown

MANILA, Philippines —Prices of basic goods and services rose at a slightly faster clip in May due mainly to higher food prices as well as an increase in the rates of rent, utilities and fuel, the government said on Wednesday.

In a press briefing, the Philippine Statistics Authority (PSA) said that the country’s headline inflation rate rose by 3.2 percent last month compared to the 3.0 percent recorded in April 2019, but lower than the 4.6 percent recorded in May 2018.

“The uptrend was primarily brought about by higher annual rates posted in the heavily-weighted food and non-alcoholic beverages index at 3.4 percent; and housing, water, electricity, gas and other fuels index at 3.3 percent,” National Statistician and Civil Registrar General Claire Dennis Mapa said.

The uptick in the country’s inflation rate was the first time after six months of consecutive slowdowns, the PSA said Wednesday.

READ: Inflation further slows to 3.8% in February

“The main drivers in the uptrend of inflation in May 2019 were food and non-alcoholic beverages; and housing, water, electricity, gas, and other fuels,” the PSA said in a tweet.

The Philippines’ headline inflation went up by 3.2 percent in May 2019. This was the first time that it rose after six consecutive months of slowdowns. #PHCPI #Inflation

— Philippine Statistics Authority (@PSAgovph) June 5, 2019

This was an increase to April’s headline rate at 3 percent.

Among the 11 major commodity groups, the PSA said the top three contributors to the overall inflation were food and non-alcoholic beverages; housing, water, electricity, gas, and other fuels; and restaurant and miscellaneous goods and services. 

For food and non-alcoholic beverages, the items which primarily contributed to the rise of inflation rate in May 2019 were other cereals, flour, cereal preparation, bread, pasta and other bakery products; fish; and fruits and vegetables, according to PSA.

For housing, water, electricity, gas, and other fuels, the primary contributors to the higher inflation in May 2019 were electricity which recorded an annual rate of 1.5 percent, and firewood, 7.0 percent, the PSA said.

Core inflation in the previous month was registered at 3.4 percent, while in May 2018, it was 3.6 percent.

Food markups

Compared with their previous month’s annual rates, the following food groups exhibited higher annual markups during the month: other cereals, flours, cereal preparation, bread, pasta and other bakery products, 3.7 percent; fish, 4.2 percent; fruits, 4.6 percent; vegetables, 12.5 percent; and unclassified food products, 6.8 percent.

As this developed, the Bangko Sentral ng Pilipinas — which eased monetary policy last month on the account of the previous inflation downtrend — dismissed the latest data as a temporary phenomenon.

“That cannot be seen as an acceleration,” BSP Governor Benjamin Diokno said in a text message to reporters. “One data point does not constitute a trend. That’s elementary. The inflation rate in May is within BSP’s forecasts of 2.8-3.6 percent for the month.”

Going forward, the BSP chief said regulators expect the inflation to be in the neighborhood of 2 percent in the third quarter of 2019.

“With world oil prices easing, we expect the annual inflation rate to be in the vicinity of 3 percent in 2019 and 2020,” he added.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said, meanwhile, that the slight uptick was also caused by the mild El Niño dry spell, but stressed that consumer prices will continued to remain in check for the rest of the year.

“Any further increase in rice imports with the removal of volume limits on imported rice under the Rice Tariffication Law may lead to higher local supply of rice, on top of the summer rice harvests, and, in turn, may lead to further decline rice prices that may contribute to further easing/decline in inflation as rice accounts for about 10 percent of the inflation index,” Ricafort said.

Excluding selected food and energy items, core inflation likewise picked up by 3.5 percent in May 2019. Core inflation in the previous month was registered at 3.4 percent, while in May 2018, it was 3.6 percent.

For the country’s food index, inflation accelerated by 3.2 percent in May 2019. Its previous month’s annual change was 2.9 percent, and in May 2018, 5.5 percent.

Compared with their previous month’s annual rates, the following food groups exhibited higher annual markups during the month: other cereals, flours, cereal preparation, bread, pasta and other bakery products, 3.7 percent; fish, 4.2 percent; fruits, 4.6 percent; vegetables, 12.5 percent; and unclassified food products, 6.8 percent.

Meanwhile, the indices of rice and corn registered annual declines of 0.7 percent and 2.8 percent, respectively. Except for the index of milk, cheese and egg which retained its previous month’s annual rate of 2.6 percent, the rest of the food groups recorded slower annual increments during the month.

Similarly, inflation in the national capital region was higher at 3.4 percent in May 2019. Its annual rate was observed at 3.1 percent in April 2019 and 4.9 percent in May 2018. This was attributed to higher annual increases posted in the indices of food and non-alcoholic beverages at 4.2 percent; and housing, water, electricity, gas and other fuels at 3.1 percent.

Meanwhile, slower annual hikes were registered in the indices of the following commodity groups: alcoholic beverages and tobacco, 3 percent; furnishing, household equipment and routine maintenance of the house, 1.6 percent; health, 4.6 percent; transport, 5.4 percent; and restaurant and miscellaneous goods and services, 3.3 percent.

Other commodity groups retained their previous month’s annual rates.

Following the same trend, inflation in areas outside the national capital region accelerated in 3.1 percent in May 2019. In the previous month, inflation in the area was noted at 3 percent, and in May 2018, 4.6 percent.

Annual increase during the month was higher in the recreation and culture index at 3.4 percent. Slower annual markups were, however, observed in the indices of the following commodity groups: alcoholic beverages and tobacco, 10.7 percent; health, 3.3 percent; transport, 3 percent; and restaurant and miscellaneous goods and services, 3.2 percent.

The rest of the commodity groups retained their previous month’s annual rates.

Eight regions in the areas outside the national capital region exhibited higher inflation in May 2019. The highest annual inflation among areas outside Metro Manila remained in the Mimaropa region at 4.7 percent, while the lowest during the month was observed in Central Visayas and the Zamboanga Peninsula, both at 1.5 percent. (Editor: Jonathan P. Vicente)