The Department of Finance (DOF) said consumer prices should prove slower in May, likely reaching only 3.2 percent on the back of lower food costs, particularly vegetables.
In latest Economic Bulletin submitted to Finance Secretary Carlos G. Dominguez III, inflation was seen slightly slowing to 3.2 percent in May, from 3.4 percent the previous month.
“This deceleration may be traced to the easing in food prices, primarily of vegetables, which are forecast to drop from 8.1 percent to 4.7 percent. This will cut down food inflation from 4.2 percent to 3.8 percent,” Finance Undersecretary Gil S. Beltran told Dominguez.
Year-on-year, the May inflation forecast accelerated from 1.6 percent in 2016. The lower inflation rate for the previous year was due to the decline in rice commodities by 0.8 percent; housing, utilities and fuels contracting by 1.2 percent; and electricity, gas and other fuels decreasing by 7.3 percent.
“Inflation for clothing and footwear, electricity, gas and other fuels, and transport will drop by 0.3 to 0.4 percentage point,” said Beltran, who is also the DOF’s chief economist.
Vegetables were seen to dip to 4.7 percent in May, from a high of 8.1 percent in April and 12.7 percent year-on-year.
Earlier the Bangko Sentral ng Pilipinas (BSP) said inflation should range from 2.9 percent to 3.7 percent this month, owing to a series of rollbacks in fuel-pump prices, as well as the downward adjustment in power rates.
“Inflation decline will give policy-makers adequate room for maneuver to sustain rapid economic growth in the face of another possible adjustment in the Fed [Federal Reserve System] rate in June,”he added.
The government has set an inflation target of 2 percent and 4 percent this year and next, while the BSP forecasts a rate of 3.4 percent for 2017 and 3 percent in 2018.
The economy, as measured by it GDP, grew by 6.4 percent in the first quarter this year, the fastest in the region.
In May index heavyweights nonalcoholic beverages and food may drop to 3.8 percent, from 4.2 percent last month, and 2.3 percent in May 2016 along with prices of alcoholic beverages and tobacco to 6.2 percent in May, from 6.3 percent in April, and 5.6 percent in the same month the previous year.
The report added that prices of clothing and footwear may decrease from 2.7 percent in April to 2.3 percent in May; furnishings, household equipment from 2.4 percent to 2.3 percent; and recreation and culture from 1.5 percent to 1.4 percent.
According to Beltran, health could also slow to 2.4 percent from 2.5 percent; transport to 2.9 percent from 3.2 percent to 2.9 percent; and communication to 0.2 percent from 0.3 percent.
Housing prices, utilities and fuels are expected to slightly rise from 3.6 percent in April to 3.7 percent in May, but the subsegment electricity, gas and other fuels may drop to 8.2 percent from the previous month’s 8.5 percent.
Education would remain at its same level of 1.8 percent from the previous month.
Manila Electric Co.’s (Meralco) rate per kilowatt-hour (kWh) from an average 200-kilowatt-per-month consumption dipped to P9.6 in May, from P9.9 in April but higher than P8.4 a year ago.
Meralco’s generation rate per kWh also fell to P4.9 during the month from P5.1 in April, but rose from P3.9 in the previous year.
Likewise, the average price of diesel in Metro Manila dropped to P30.8 per liter from P31.4 in the previous month, but higher than the P26.4 registered in the same month last year.
Meanwhile, the average price of gasoline in the first four weeks of May increased to P45.3 per liter from P45.1 in April and P40.4 the year before.