MANILA – Ample supply of key food items and lower electricity and fuel prices pulled down inflation to its lowest level in 20 years, as headline inflation rate eased further to 1.6 percent in May 2015 from 2.2 percent in the previous month, according to the National Economic and Development Authority (NEDA).
“Using the current base year 2006, the May 2015 inflation rate is the lowest, covering the monthly inflation series from 1995 to May 2015. It was also below the market expectation of 2.0 percent,” said NEDA Officer-in-Charge (OIC) and Deputy Director-General Rolando G. Tungpalan.
He added that year-to-date, headline inflation ending May 2015 averaged at 2.2 percent, comfortably within the inflation target range of 2.0 to 4.0 percent set by the government for 2015.
The Philippine Statistics Authority reported that inflation in the food subgroup eased in May 2015 (3.2% from 4.0%) following slower price adjustments in rice, meat, fish, and fruits.
“Rice prices have normalized, as total rice stocks inventory grew by 16.5 percent year-on-year as of April 2015. With favorable weather conditions, the supply of fish has been steady and sufficient and the volume of in-season fruits in the market stable,” the NEDA official said.
“Inflation in the meat index was also curbed, following the Department of Trade and Industry’s imposition of lower suggested retail price,” Tungpalan added.
Non-food inflation also moderated in May 2015 (0.3% from 0.8%) resulting from the sustained decline in the prices of electricity, gas, and other fuels.
Meanwhile, core inflation, which excludes selected volatile food and energy prices, slid further to 2.2 percent from 2.5 percent in April 2015 and 3.1 percent in May 2014. Core inflation in the first five months of 2015 averaged at 2.5 percent.
Also, the slowdown of inflation in May 2015 appears to be geographically broad-based as the price index in the National Capital Region (NCR) slid to 0.7 percent in May 2015 from 1.5 percent in April 2015 and 3.8 percent in the same period a year ago.
Likewise, all regions except Region X (Northern Mindanao) registered slower year-on-year price increases, thus, resulting in a tempered overall inflation of 1.8 percent in May 2015 for areas outside NCR, from 2.3 percent in April 2015 and 4.7 percent in May 2014.
“Inflation remained low and stable in the first five months of 2015 in line with expectations over the policy horizon. This bodes well for household consumption,” he said.
Tungpalan also assured that overall, policies remain supportive of a manageable rate of inflation.
“With the country’s strong external position, the peso is expected to remain relatively stable and this will contribute to stable domestic prices going forward,” he said.
But despite the low inflation figures, the government remains wary of possible inflation risks.
“With the report that El Niño in the country may likely continue until early 2016, we should be keen in monitoring drought in agricultural areas and be ready to assist our farmers should there be a need to shift to crops that are less dependent on water and at the same time resilient to the high temperature climate,” said Tungpalan.
Tungpalan is OIC of NEDA while Economic Planning Secretary Arsenio M. Balisacan is on official business abroad from June 2-5, 2015.