Consumer prices rose for four consecutive months in May, driven by spikes in electricity, fuel, and transportation costs, according to the Philippine Statistics Authority (PSA).
The PSA reported that the headline inflation rate increased to 3.9 percent in May from 3.8 percent in April. In May 2023, inflation rate was higher at 6.1 percent.
The May inflation figure brought the national average inflation from January to May 2024 to 3.5 percent or within the government’s target of 2 percent to 4 percent.
It said that the slight uptick in inflation resulted mainly from the higher year-on-year increase in the prices of housing and utilities for the month at 0.9 percent from 0.4 percent in April.
A faster annual growth for the transport index was also recorded in May at 3.5 percent from 2.6 percent the previous month.
PSA said the uptick was triggered by the higher year-on-year increase in the index of the housing, water, electricity, gas and other fuels at 0.9 percent during the month from 0.4 percent in April 2024.
The faster annual growth of the transport index at 3.5 percent in May 2024 from 2.6 percent in April 2024 also contributed to the uptrend of overall inflation.
The BSP said the May 2024 inflation of 3.9 percent is within its forecast range of 3.7 to 4.5 percent.
“The inflation outturn is consistent with the BSP expectations that inflation could temporarily accelerate above the target range over the near term due to adverse weather conditions on domestic agricultural output and positive base effects,” BSP said.
Nonetheless, the BSP expects average inflation to return to the target range for full year 2024 and 2025.
“The risks to the inflation outlook continue to lean toward the upside. Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and increase in global oil prices,” BSP said.
“Looking ahead, the Monetary Board will consider the latest inflation outturn in its upcoming monetary policy meeting on 27 June 2024,” the BSP said.
Meanwhile, the National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said the government will continue to implement lasting policy reforms to ensure we address the drivers of food and non-food inflation sustainably.
“We want to maintain a macroeconomic environment conducive to investment and high-quality job creation—an environment that would allow us to hit the Marcos Administration’s development targets by 2028,” Balisacan said.
Meanwhile, food inflation decelerated but is still elevated at 6.1 percent in May from 6.3 percent in April.
The slowdown of food inflation for the month was primarily due to the slower increase in the prices of vegetables, tubers, plantains, and cooking bananas to 2.7 percent in May from 4.3 percent in April.
Although still elevated, rice inflation decreased slightly to 23.0 percent for the month from 23.9 percent in April. The May inflation report recorded a zero-percent inflation rate for fish and other seafood from 0.4 percent the previous year.
“To help manage food inflation, promote policy stability and investment planning, and enhance food security, the NEDA Board has agreed to reduce the rice duty rate to 15 percent from 35 percent for both in-quota and out-quota imports until 2028, “ Balisacan said.
Balisacan added that the NEDA Board also approved the extension until 2028 of the reduced tariff rates on corn, pork, and mechanically deboned meat under Executive Order No. 50, s. 2023.
“The NEDA Board approved the new Comprehensive Tariff Program for 2024-2028, a strategic move to ensure access and affordability to essential commodities while balancing the interests of consumers, local producers, and the economy. At the same time, we recognize the need to help our farmers by modernizing our agricultural sector,” he said.
Balisacan further stressed that one of the Marcos Administration’s priorities is to raise productivity so that the country can sustainably reduce food prices and shield our consumers and economy from the price volatility of food commodities in the global market.
Also, to mitigate the impact of elevated food prices on the poor and vulnerable sector, the Department of Social Welfare and Development (DSWD) and relevant agencies are set to implement the Food Stamp Program nationwide in July fully. This program expects to cover one million households by 2027 from the initial 300,000 families in 10 regions.
Meanwhile, Finance Secretary Ralph G. Recto assured the public that the government is carefully balancing food and non-food inflation mitigation measures by conducting regular reviews and adjustments of policies to ensure that Filipinos’ purchasing power is well protected.
“We are vigilantly tracking persistent inflation drivers and employing a whole-of-government approach in crafting data-driven policy measures to effectively counter their effects in a sustainable manner. Our top priority is to ensure that the majority of Filipinos, especially the poor and vulnerable sector, benefit from these interventions,” he said.
For example, to protect consumers from possible spikes in electricity prices due to MERALCO’s proposed cost recovery, the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) has proposed to the Energy Regulatory Commission (ERC) a staggered implementation of the cost recovery scheme over at least twelve months to mitigate its inflationary impact.
“Rest assured, the government is continuously formulating sustainable solutions that will manage the price increases of other commodities and keep inflation within our target range. The solutions on the food security front are guaranteed to work in tandem with our long-term goal of modernizing our agriculture sector,” Secretary Recto said.
Also, starting June 1, 2024, an exemption from toll rate hikes was implemented for trucks transporting agricultural goods to prevent the second-round effects of toll rate increases on food inflation and ensure that food prices are kept stable for consumers.
