Inflation cooled down to a one-year low of 6.1 percent in May from 6.6 percent in April on slower increases in transport costs, food and non-alcoholic beverages, the Philippine Statistics Authority said Tuesday.
PSA data showed the May inflation was the slowest since it settled at the same rate in June 2022. It, however, remained elevated compared to 5.4 percent a year ago.
This brought the average in the first five months to 7.5 percent, above the 2023 target range of 2 percent to 4 percent.
“We are confident that we can achieve the government’s inflation target this year as we work closely with concerned government agencies in monitoring the primary drivers of inflation,” said National Economic and Development Authority Secretary Arsenio Balisacan.
National statistician and civil-registrar Dennis Mapa said the inflation declined for the fourth consecutive month,
Among the 13 commodity groups, the downtrend was brought about by the annual decline in the index of transport at -0.5 percent from 2.6 percent annual increase in the previous month.
The heavily-weighted food and non-alcoholic beverages also pulled down the overall inflation with a lower inflation rate of 7.4 percent from 7.9 percent in April 2023.
The third main source of deceleration was restaurants and accommodation services, which registered slower inflation at 8.3 percent from 8.6 percent in the previous month.
The annual rate of alcoholic beverages and tobacco index also slowed down to 12.3 percent.
Meanwhile, higher inflation rates were observed in the indices of furnishings, household equipment and routine household maintenance at 6.2 percent in May 2023 from 6.1 percent in April 2023; and recreation, sport and culture at 4.9 percent during the month from 4.7 percent in the previous month.
The May inflation was within the 5.8 percent to 6.6 percent target range announced by the Bangko Sentral ng Pilipinas for the month.
The BSP in its latest policy meeting kept the overnight borrowing rate at 6.25 percent taking into account the slowdown in inflation in the past months.
NEDA reassured the public that a coordinated and pro-active monitoring system is in place to keep food and energy prices within the target range.
It attributed the steady slowdown in inflation to slower food and transportation inflation. Meat inflation moderated as the inflation rate for chicken decreased from 7.7 percent to 5.9 percent and the inflation rate for beef decreased from 6.1 percent to 5.3 percent.
Meanwhile, pork continued to experience deflation, with a rate of -1.0 percent compared to -0.3 percent, due to an increase in import arrivals accompanied by timely unloading of frozen pork stocks.
Inflation in the prices of fish and eggs eased due to increased local production. The decline in international prices of wheat and dairy also contributed to the slower inflation, particularly for bread, milk, and dairy products.
President Ferdinand R. Marcos Jr. signed Executive Order No. 28 on May 26, 2023, creating the Inter-Agency Committee on Inflation and Market Outlook.
The committee aims to enhance government coordination in managing inflation and mitigating the impact of rising commodity prices.
Balisacan said the committee is keeping tabs not only of current trends and data on local and international prices but also the level of domestic production, import arrivals, climate outlook, and other relevant supply and demand information for key commodities.
“As the risks to the inflation outlook lean towards the upside due to potential increases in transport fares, wage adjustments, higher electricity rates, and domestic prices of key food items resulting from the impact of El Niño, the government is working to implement the necessary interventions as we aim to keep prices low and stable for Filipino consumers,” said Balisacan.
He said for short-term measures, there is a need to fill local supply gaps through timely importation, ensure sufficient rice buffers during El Niño and strengthen biosecurity.
To mitigate the impact of El Niño on food security, Balisacan recommended ensuring an adequate supply of agricultural inputs, prepositioning pumps, promoting early planting in areas likely to experience water deficit in the coming months, and maximizing production in non-threatened areas.
“With accurate data at hand, we can anticipate possible food and energy shortages and provide timely recommendations to prevent increases in commodity prices. This will ensure food and energy security and safeguard the purchasing power of Filipino families, especially the poor and vulnerable,” he said.