PHILIPPINE inflation rate eased in May to 3.1 percent from 3.4 percent in the previous month, the National Economic and Development Authority (Neda) said Tuesday.
The May inflation was lower than market expectations of 3.3 percent, and is within government’s target of 2.0-4.0 percent for 2017. From January to May, inflation rate averaged at 3.1 percent.
Neda attributed the lower inflation in May on "slower price adjustments in both food and non-food commodities."
Inflation for the food and non-alcoholic beverages subgroup eased to 3.8 percent from the previous month’s 4.2 percent. This is due to slower price adjustments in vegetables, fish, oils and fats, as well as sugar, jam, honey, chocolate and confectionery.
Slowdown in the prices of vegetables, in particular, was attributed to the resilience of crops in northern Philippines that withstood unfavorable weather and frost earlier this year.
However, other food commodities like fruits, meat and rice recorded faster price increases in May 2017. Rice inflation accelerated further to 2.4 percent.
“These trends bear watching, given the significant impact of food prices on the poor. The amendment of domestic laws to reflect the expiry of the WTO (World Trade Organization) waiver on rice quotas should also be pursued,” said Socioeconomic Planning Secretary Ernesto Pernia.
Meanwhile, non-food inflation also slowed to 2.5 percent in May 2017 from 2.7 percent in April. This was driven by slower price adjustments for clothing and footwear, furnishing, household equipment, health, transport, communication, and recreation and culture.
This follows the slower year-on-year increase in domestic petrol prices during the period.
Slower inflation was also recorded for unleaded gasoline, diesel, kerosene, and LPG in May 2017 relative to the previous month.
Pernia said the country’s overall economic outlook remains optimistic considering recent international and domestic developments.
“On the external front, growth prospects for the global economy have improved, and the expected recovery of international trade should provide ample supply of commodities to support domestic production,” said Pernia.
He added that, on the domestic front, neutral weather conditions are likely to prevail over potential recurrences of El Niño or La Niña, based on the latest outlook of the state weather forecasting agency and the International Research Institute for Climate and Society.
This could lead to increased production of agricultural products, especially palay and corn. (SDR/SunStar Philippines)