The increase in consumer prices would likely move at a much slower pace this month as food costs, particularly of vegetables tapered off, the Department of Finance (DOF) said.
Based on the latest Economic Bulletin submitted to Finance Secretary Carlos Dominguez III, inflation would slightly slow to a 3.2 percent annual rate in May from 3.4 percent in the previous month.
“This deceleration may be traced to the easing in food prices, primarily of vegetables, which are forecast to drop from 8.1 percent to 4.7 percent. This will cut down food inflation from 4.2 percent to 3.8 percent,” Finance Undersecretary Gil Beltran said in his report to Dominguez.
On a year-on-year basis, the May inflation forecast accelerated from 1.6 percent previously, but a respite from the upward trend in the first three months that brought rate to a 28-month high of 3.4 percent in March.
The Bangko Sentral ng Pilipinas (BSP) earlier said that inflation would range between 2.9 percent and 3.7 percent this month owing to a series of rollbacks in fuel pump prices as well as the downward adjustment in power rates.
“Inflation for clothing and footwear, electricity, gas and other fuels, and transport will drop by 0.3 to 0.4 percentage point,” said Beltran, who is the DOF’s chief economist.
“Inflation decline will give policymakers adequate room for maneuver to sustain rapid economic growth in the face of another possible adjustment in the Fed rate in June,” he said.
The Duterte administration’s economic team has set an inflation target of 2.0 percent and 4.0 percent this year and next year, while the BSP is forecasting a rate of 3.4 percent for 2017 and 3.0 percent in 2018.
The country’s economy, as measured by its gross domestic product (GDP), grew by 6.4 percent in the first quarter of the year, the highest economic expansion in the region.
In May, index heavyweights non-alcoholic beverages and food may drop to 3.8 percent from 4.2 percent last month, along with prices of alcoholic beverages and tobacco to 6.2 percent from 6.3 percent.
Likewise, prices of clothing and footwear may decrease from 2.7 percent in April to 2.3 percent in May; furnishings, household equipment from 2.4 percent to 2.3 percent; and recreation and culture from 1.5 percent to 1.4 percent.
Health could also slow to 2.4 percent from 2.5 percent; transport to 2.9 percent from 3.2 percent to 2.9, and communication to 0.2 percent from 0.3 percent.
Prices of housing, utilities and fuels, however, are expected to slightly rise from 3.6 percent in April to 3.7 percent in May, but the sub-segment electricity, gas and other fuels may drop to 8.2 percent from the previous month’s 8.5 percent.
Education would remain at its same level of 1.8 percent from the previous month.
In the first four weeks of May, Manila Electric Co.’s (Meralco) rate per kilowatt hour (kWh) for an average of 200 kilowatts-per-month consumption dipped to P9.6 from P9.9 in April, but higher than P8.4 a year ago.
Meralco’s generation rate per kWh also fell to P4.9 during the month from P5.1 in April, but rose from P3.9 in the previous year.
Likewise, the average price of diesel in Metro Manila among the “big three” oil companies dropped to P30.8 per liter from P31.4 in the previous month, but higher than the P26.4 registered in the same month last year.
Meanwhile, the average price of gasoline in the first four weeks of May increased to P45.3 per liter from P45.1 in April and P40.4 a year before.
