Headline inflation continued to fall in May, slowing down to 1.6 percent year-on-year from 2.2 percent in April, the lowest in 20 years1 and was within the BSP’s range forecast of 1.6-2.4 percent for the month. The resulting year-to-date average inflation rate of 2.2 percent was also within the Government’s inflation range target of 3.0 percent ± 1.0 percentage point for 2015. Likewise, core inflation—which excludes certain volatile food and energy items to better capture underlying price pressures—decelerated to 2.2 percent in May from 2.5 percent in the previous month. On a month-on-month seasonally-adjusted basis, inflation was steady at 0.1 percent in May.
Moderate price increases for most food items helped push down headline inflation in May. In particular, rice, corn, meat, fish, milk, oils, and fruits posted lower price increases due to adequate domestic supply. Similarly, non-food inflation eased further due mainly to the downward adjustment in electricity rates resulting from lower generation charges in the Wholesale Electricity Spot Market as well as the continued reduction in prices of domestic petroleum products in year-on-year terms.
Governor Amando M. Tetangco, Jr. said that the actual inflation in May continues to affirm the BSP’s assessment of a manageable inflation outlook over the policy horizon. Looking ahead, the BSP will remain vigilant in monitoring price and output conditions to ensure price stability conducive to a balanced and sustainable economic growth.
1 All-time low inflation rate using the 2006-based CPI series, with data available from 1995 onwards.