Inflation rate picked up to 3.2 percent in May from 3 percent in April, as the El Niño dry spell resulted in higher prices of food and non-alcoholic beverages, the Philippine Statistics Authority said Wednesday.
The May figure, however, was still lower than 4.6 percent registered in the same month last year and fell within the government’s target range of 2 percent to 4 percent.
It brought the average inflation in the first five months to 3.5 percent, also within the target.
“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,” PSA said in a statement.
Meanwhile, slower annual increments were observed in the indices of alcoholic beverages and tobacco at 9.5 percent; transport, 3.5 percent; and restaurant and miscellaneous goods and services, 3.3 percent. The rest of the commodity groups retained their previous month’s annual rates.
The Bangko Sentral ng Pilipinas said in a statement the inflation outturn for May 2019 “continues to be in line with the BSP’s current assessment that inflation will settle within the target range [2 percent to 4 percent] for 2019 and 2020.”
“Looking ahead, the BSP will continue to monitor evolving price trends to ensure that the monetary policy stance remains consistent with its price stability objective,” it said.
Economic Planning Secretary Ernesto Pernia said the government should take proactive and long-term solutions to address the El Niño phenomenon.
“Faster price adjustments in food and non-alcoholic beverages drove the uptick in headline inflation as weak El Niño conditions persisted, and brought significant damage to the agriculture sector in the midst of the election period’s strong consumption demand,” said Pernia.
He said El Niño was a recurring problem that required an immediate and long-term response. “The country needs to have a more robust solution to mitigate the impacts of extreme weather conditions and climate change considering that the Philippines is prone to natural disasters,” he said.
Pernia said the threat of the African swine fever entering the country, the increase of rice prices in the international market and the volatility in global oil prices posed upside risks to inflation.
“With the possible global pork shortage and the ban on importation of pork products from ASF-affected areas, domestic production of livestock should be beefed up to meet household and commercial demand,” he said.
He said that with the influx of imported rice, the Agriculture Department should increase its assistance to the less competitive rice farmers in their shift to planting other high-value crops.
“The Rice Competitiveness Enhancement Fund must be properly utilized in a timely manner to support the affected farmers as mandated by the rice tariffication law,” he said.