Headline inflation increased year-on-year to 4.5 percent in May from the April level of 4.3 percent (revised). The year-to-date average was unchanged at 4.2 percent and remained within the Government's target range of 3-5 percent for 2011. Core inflation, which excludes certain food and energy items to measure generalized price pressures, was also higher in May at 3.7 percent compared with 3.3 percent (revised) in April. Meanwhile, month-on-month headline inflation in May was zero, down from 0.6 percent (revised) in the previous month.
Inflation pressures in May were attributed mainly to the increase in inflation for non-food items, due largely to higher year-on-year inflation for light. Higher rice prices due to crop damages wrought by Typhoon Chedeng also contributed to the uptick in inflation. Meanwhile, lower prices of fruits and vegetables tempered headline inflation in May as domestic supply remained adequate. Rollbacks in the prices of petroleum products, particularly for kerosene, dampened May inflation as well.
Governor Amando M. Tetangco, Jr. noted that, while the May inflation rate was within the BSP's forecast for the month of 4.5-5.5 percent, the BSP remains mindful of the continued risks to the outlook for inflation, including the impact of volatility in international commodity prices. He stressed that the BSP will continue to keep a close watch on price pressures over the policy horizon and will promptly adjust the policy stance, if needed, to achieve the BSP's price stability objective.