Inflation hits over 3-year high in May at 5.4%

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Metro Manila (CNN Philippines, June 7) — Inflation shot up to 5.4% in May compared to 4.9% in April, with food and transport costs leading the increase in commodity prices, the Philippine Statistics Authority announced Tuesday.

This is the fastest pace since November 2018, when inflation stood at 6.1%.

May's figure brings average inflation for 2022 to 4.1%, officially breaching the 2-4% target band of the Bangko Sentral ng Pilipinas for the year.

Food and non-alcoholic beverages mainly pushed up inflation for the period with vegetables, meat, and fish leading the increase for the commodity group.

Transport was the second biggest contributor to quicker inflation in May. Gasoline, passenger transport by road, and diesel primarily drove the group's faster pace.

National Statistician Dennis Mapa acknowledged the "spillover" of higher transport costs on food items, leading to the faster rise in costs for that group.

"Nakita natin nitong mga nakaraang buwan na nagsimulang mag-spill over 'yung effect nung increased transport [costs] doon sa food basket natin. At ngayong buwan, nakita natin na talagang nagkaroon na siya ng malaking effect," said Mapa in a briefing.

[Translation: We have seen in the past months that the effect of increased transport costs has already begun spilling over to our food basket. This month, we saw that it really had a huge effect.]

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Alcoholic beverages and tobacco likewise accounted for the acceleration in May. For this basket, the main drivers were cigarettes, spirits and liquors, and beer.

Inflation for the National Capital Region was at 4.7% in May, surpassing the 4.4% rate the month prior.

For areas outside NCR, it stood at 5.5% — quicker than April's 5.1% pace.

Among the 14 regions that posted quicker inflation, the Cordillera Administrative Region saw the swiftest at 6.9%. The Bangsamoro Autonomous Region in Muslim Mindanao again recorded the slowest rate at 2.4%.

Only Central Visayas saw inflation ease in May at 5.3%, while Northern Mindanao was the sole region with a steady rate at 4.6%.

The country's poorest households also observed a quicker jump in prices last month, with inflation rising to 4.3% from 3.8% in April.

Average inflation for this income group is 3.5% this year.

Inflation rates for the bottom 30% income households still use 2012 as base year, unlike other figures which already use 2018, as the PSA is still in the process of rebasing for the income group.

The Bangko Sentral ng Pilipinas separately acknowledged that May national inflation falls within their 5-5.8% projected target band.

The central bank pointed to supply-side factors as the main driver of inflation amid volatile global commodity prices and supply chain disruptions.

"The balance of risks to the inflation outlook now leans toward the upside for both 2022 and 2023. The upside pressures emanate from the potential impact of higher oil prices, including on transport fares, as well as the continued shortage in domestic pork and fish supply," it said.

Meanwhile, the National Economic and Development Authority said fuel subsidies will help ease global inflationary pressures along with Executive Order 171 — which has extended until year-end lower import tariffs for pork and rice, slashed those for corn, and temporarily eliminated those for coal.

"These temporary measures are expected to increase our food supply and ease higher electricity costs in the short-term," said NEDA chief Karl Chua.