MANILA, Philippines—The country’s inflation rate decelerated slightly to 2.9 percent in May from 3 percent in April on slower price increases in housing, utilities, fuels and services, the National Statistics Office (NSO) said in a report released Tuesday.
The recent series of price rollbacks in LPG, kerosene, gasoline and diesel in most of the regions, including Metro Manila, resulted in a slower national monthly price increment in consumer items, the NSO said.
The low inflation rate for May brought the year-to-date average to 3 percent, or the low end of the government’s target of 3 to 5 percent for the whole year of 2012.
Excluding selected food and energy items, core inflation for the whole country rose slightly to 3.7 percent last month from 3.6 percent in April, according to the NSO. Core inflation takes out food and fuel items that tend to be influenced by seasonal and short-term price pressures, revealing the underlying trend in average consumer prices.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the latest inflation rate showed that current interest rates were appropriate at the moment.
He said, however, that the BSP would not hesitate to make adjustments should there be factors that could significantly drag growth lower or cause inflation to surge.
“We will continue to monitor developments, particularly in Europe and the United States, to assess their potential impact on domestic price movements and on our own growth prospects to see if there is any need to make adjustments in our policy stance,” Tetangco said.
Professor Benjamin E. Diokno of the UP School of Economics said in an e-mail to the Inquirer that the mild inflation in May was likely to be sustained in the coming months, barring major catastrophes that could affect food prices, as oil prices were expected to fall and with the summer months over, the demand for electricity would normalize.
“The relatively tame inflation rates may provide BSP more confidence in addressing its other mandate, which is economic growth. Increased lending to small- and medium-scale industries should be encouraged,” Diokno said.
HSBC also expects the BSP to keep interest rates at current levels throughout the year, saying the favorable growth and inflation dynamics in the country gave monetary authorities the flexibility to observe status quo.
Originally posted: 11:47 am | Tuesday, June 5th, 2012