Metro Manila (CNN Philippines) — Because of an ample supply of key food items and slower electricity and fuel prices, the National Economic and Development Authority (NEDA) said that the economy’s inflation rate eased to 1.6% in May this year, from 2.2% the previous month.
The statistic amounts to the country’s lowest inflation rate in 20 years.
“Using the current base year 2006, the May 2015 inflation rate is the lowest, covering the monthly inflation series from 1995 to May 2015. It was also below the market expectation of 2.0 percent,” said Rolando Tungpalan, NEDA officer-in-charge.
Since January 2015, headline inflation ending May averages out at 2.2%. This sits within the government’s inflation target range of 2% to 4%.
Figures from the Philippine Statistics Authority (PSA) revealed that food inflation also eased in May to 3.2% from 4%, because of slower prices adjustments in rice, meat, fish, and fruits.
“Rice prices have normalized, as total rice stocks inventory grew by 16.5 percent year-on-year as of April 2015. With favorable weather conditions, the supply of fish has been steady and sufficient and the volume of in-season fruits in the market stable,” Tungpalan said.
“Inflation in the meat index was also curbed, following the Department of Trade and Industry’s imposition of lower suggested retail price.”
Inflation in the non-food induce also slowed down in May to 0.3% from 0.8%, because of a sustained decline in electricity, gas, and other fuel prices.
Core inflation — another metric which excludes selected food and energy prices because of their volatility — also notched a slightly slower increase to 2.2% in May from 2.5% in April and 3.1% in May 2014. Core inflation for the first five months of 2015 evens out at 2.5%.
“Inflation remained low and stable in the first five months of 2015 in line with expectations over the policy horizon. This bodes well for household consumption,” Tungpalan said,
Save for the Northern Mindanao region, all other regions in the country notched slower year-on-year inflation, result ing in an overall rate of 1.8% for areas outside NCR, from 2.3% the previous month, and 4.7% in May 2015.
“With the country’s strong external position, the peso is expected to remain relatively stable and this will contribute to stable domestic prices going forward,” Tugpalan noted.
However, he remains watchful of the current weather conditions.
“With the report that El Niño in the country may likely continue until early 2016, we should be keen in monitoring drought in agricultural areas and be ready to assist our farmers should there be a need to shift to crops that are less dependent on water and at the same time resilient to the high temperature climate.”
