May inflation steady at 2.6%

The increase in the prices of basic goods and services was steady at 2.6 percent in May despite mixed price movements among commodity groups, the National Statistics OfÞce (NSO) reported yesterday.

The result, similar to April's 13-month low Þgure, fell within the Bangko Sentral ng Pilipinas' 2.2 percent to 3.1-percent forecast range for May. Inflation a year ago was at 2.9 percent. For the first five months, average inflation

settled at three percent, falling at the lower end of the central bank’s three to five-percent target for the year.

“Barring unforeseen developments, we expect inflation to be closer to the lower end of our target range of three to five percent over the policy horizon,” BSP Governor Amando Tetangco Jr. said in a text message.

“That said, we remain mindful of local and global developments, including pending petitions for power rate adjustments and shifts in capital flows... that could impact financial and real asset prices,” he added.

For May, the NSO noted “mixed movements” in prices of basic goods and services, as measured by the consumer price index.

Upside pressures, it said, came mainly from food and utility prices, which increased by 2.4 percent and 1.5 percent, respectively.

Core inflation, which excludes volatile food and energy items, dipped to three percent in

May from 3.1 percent in April, the government statistics office said.

The education index, on the other hand, posted an inflation of 4.4 percent, similar from a month ago, despite expectations it will rise on the back of the enrollment season.

The remaining indices, meanwhile, posted slower price gains versus April. They include alcoholic beverages and tobacco (from 31.4 percent to 31.1 percent); clothing and footwear (from 4.2 percent to 3.5 percent); and furnishing and household equipment (from four percent to 3.7 percent).

With growth hitting an unexpected 7.8 percent on the previous quarter, Tetangco said the BSP stands ready should inflation pick up as well.

“BSP has policy space to address inflation pressures from these impulses and is ready to make policy adjustments as needed,” he said.