Headline inflation was unchanged at 2.6 percent year-on-year in May, and was within the BSP’s forecast of 2.2-3.1 percent for the month. The resulting year-to-date average inflation rate of 3.0 percent was at the low end of the Government’s inflation target range of 4.0 percent ± 1.0 percent for 2013. Core inflation, which excludes certain food and energy items to measure generalized price pressures, decreased slightly to 3.0 percent in May from 3.1 percent in the previous month. Meanwhile, month-on-month headline inflation decelerated slightly to 0.1 percent from 0.2 percent in April.
Inflation in May held steady as higher prices of selected food commodities were counterbalanced by the downward adjustment in electricity charges and reduction in the prices of domestic petroleum products. Food inflation increased slightly as some food commodities, particularly fruits, vegetables, and meat, posted higher prices due partly to tight supply conditions following higher spoilage of supplies during the summer season. Meanwhile, lower charges in electricity rates as a result of lower transmission and system loss charges, as well as price reductions in gasoline, diesel, LPG, and kerosene which reflected lower international prices of oil, offset the rise in food inflation.
Governor Amando M. Tetangco, Jr. said that the latest inflation reading continues to be consistent with the BSP’s assessment of a manageable inflation environment over the policy horizon, with average inflation expected to settle closer to the lower end of the 3.0-5.0 percent target range based on latest forecasts. Moving forward, the BSP will continue to closely monitor price and demand developments to ensure sustained support to the BSP’s primary mandate of delivering price stability conducive to a balanced and sustainable economic growth.