INFLATION further accelerated in May as oil and other commodity prices remained elevated, the government announced on Tuesday.
The consumer price index climbed 5.4 percent last month, the quickest since 2018, and faster than the 4.9 percent in April, the Philippine Statistics Authority said.
Philippines has among Southeast Asia’s quickest inflation. The peso slid last week to three-year low, potentially further fanning costs in a country that imports commodities from crude oil to wheat.
The figure is within the Bangko Sentral ng Pilipinas’ projected range of 5 to 5.8 percent inflation for the month. Year-to-date inflation settled at 4.1 percent, slightly above the BSP’s target range of two to four percent for 2022.
Socioeconomic Planning Secretary Karl Kendrick Chua in a statement said that the Russia-Ukraine conflict has disrupted the global supply chain and elevated commodity prices, particularly for fuel.
“We have seen how a single crisis can set us back, so the Duterte administration has pursued both short- and long-term interventions to increase the resilience of our domestic economy against external shocks,” the country’s chief economist said.
Faster inflation for both food and non-food commodity groups contributed to the increase in headline inflation.
Food inflation further accelerated to 5.2 percent in May from 4 percent in April, due to faster inflation rates for vegetables, fish, and meat.
Corn inflation remained high at 24.4 percent due to limited global supply. In contrast, rice inflation remained stable and decelerated to 1.5 percent amid the implementation of the Rice Tariffication Law and EO No. 135, which diversified the country’s rice sources.
Meanwhile, non-food inflation continued to increase to 5.6 percent in May from 5.4 percent in April, driven by transport inflation which increased to 14.6 percent in May from 13 percent in April due to elevated world oil prices. Private transport inflation accelerated to 47.9 percent from 44.4 percent, while public transport remained muted at 1.6 percent due to fare regulation.
Household inflation for electricity, gas, and other fuels also remained high even with a slight deceleration at 18.8 percent from 19.9 percent.
To help cushion the impact of higher fuel prices on the most vulnerable, the government has increased the total budget for targeted subsidies to P6.1 billion. As of June 1, 2022, over 180,000 PUV drivers and operators have received their P6,500 fuel subsidy under the Pantawid Pasada program. At the same time, more than 158,000 farmers and fisherfolk are also set to receive P3,000 as fuel discounts.
Moreover, to facilitate the entry of more goods at lower prices, President Duterte issued Executive Order No. 171 to modify tariff rates for pork, corn, rice and coal. This is among the key recommendations of the Economic Development Cluster in addressing the inflationary impact of the Russia-Ukraine conflict.
EO No. 171 extends the validity of EO Nos. 134 and 135, which lowered the most favored nation (MFN) tariff rates for the importation of pork and rice. The EO also reduces MFN tariff rates for corn to five percent in-quota and 15 percent out-quota, citing that corn accounts for more than 50 percent of the total production cost of large-scale broiler and swine farms.
To help maintain or lower electricity prices, EO No. 171 also temporarily eliminates the seven percent MFN import tariff rate on coal as it is an important raw material in the generation of electricity.
“These temporary measures are expected to increase our food supply and ease higher electricity costs in the short-term,” Chua said.