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Inflation Rate Declines to 6.5 Percent in May

06.05.2001

“The year-on-year inflation rate of 6.5 percent for May 2001 was lower vis-à-vis expectations and the rates registered in the past four months.  The deceleration was traced mainly to positive supply-side factors, notably lower prices for food as well as fuel, light and water (FLW) items.” 

“Actual inflation thus continues to move along its expected path for the year, and we believe that the 6.0-7.0 percent inflation target for 2001 is achievable.  The BSP’s assessment of prospective inflation continues to indicate an easing trend during the latter half of 2001 given favorable supply-side conditions.  Softening food prices, in particular, are expected to provide a stabilizing influence on the general price level. The resulting benign inflationary environment implies greater flexibility for the monetary policy stance.”

“Nevertheless, upside risks to the inflation environment remain present and bear continued observation.  Monetary authorities will continue to pay close attention to the developments in the overall economy for a timely response to potential inflationary risks.”  

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