Inflation in May 2016 accelerated to 1.6 percent from 1.1 percent in the previous month as both food and non-food prices picked up in the period, according to the National Economic and Development Authority (NEDA).
“The increase in inflation can be attributed to higher demand due to election spending and partly to supply constraints in agriculture because of the residual effects of the weakening El Niño,” said Socioeconomic Planning Secretary Emmanuel F. Esguerra.
The May 2016 inflation is above the market expectation of 1.4 percent but within the Bangko Sentral ng Pilipinas’ forecast of 1.1-1.9 percent for the month.
Core inflation, which excludes volatile prices of energy and food, slightly increased at 1.6 percent as compared to the previous month and the 1.5 percent in May 2015.
“The manageable inflation rate for the first five months of 2016 is expected to continue for the rest of the year as the productive capacity of the domestic economy expands and oil prices remain low,” the Cabinet official said.
“The stability in inflation rate will create a positive environment for investments and ensure affordability of basic commodities for the poor,” added Esguerra, who is also NEDA Director-General.
Full-year inflation for 2016 is expected to be close to the lower bound of the inflation target set at 2.0 to 4.0 percent by the Development Budget Coordination Committee.
Prices of commodities in the food subgroup rose to 2.3 percent in May 2016. Rice prices inched by 0.1 percent month-on-month for the first time in eight months but remain lower than the previous year.
“The timely importation of rice to offset domestic production losses due to El Niño mitigated the possible skyrocketing of rice prices,” he said.
Inflation in the non-food group inched up by only 0.1 despite an increase in all subgroups except for education, which remained stable at 3.6 percent.
Also, oil prices surged in May 2016, particularly for gasoline (4.83%); liquefied petroleum gas (3.21%); diesel (15.07%), and kerosene (7.61%). This was due to cutbacks in the production and exploration of international energy firms.
On the domestic front, he stressed that the government must remain vigilant in mitigating the enduring effects of El Niño while preparing for the likely occurrence of La Niña in the second half of the year.
“The government must accelerate the implementation of the Roadmap for Addressing the Impact of El Niño, especially in areas that have declared a state of calamity. In addition, it must stay alert and prepared for disasters that could ensue with the occurrence of La Niña. ” said Esguerra.