- May inflation slows but remains above target
- Central bank signals further rate hikes to return inflation to 3%
- Core inflation rose to 4.1% in May; food and transport inflation eased
MANILA — The Philippine central bank said it will “take necessary actions” to bring inflation back to its target, after the annual pace of consumer price growth remained aboveits 3% goal for a third straight month in May.
Annual inflation unexpectedly slowed to 6.8% in May from 7.2% in April, largely due to slower increases in food and transport costs, the statistics agency said on Friday.
Economists in a Reuters poll had expected May inflation to quicken to 7.5% from the previous month’s 7.2%, while the central bank had set a forecast range of 7.1% to 7.9%.
“While the easing of inflation in May is encouraging, we recognize that price pressures remain elevated,” Economic Planning Secretary Arsenio Balisacan said in a statement.
The slowdown in inflation comes ahead of the central bank’s scheduled June 18 meeting, when it is expected to hike interest rates for the second time in a row after raising the benchmark rate by 25 basis points to 4.5% in April to keep a lid on prices.
“The BSP will take necessary actions to ensure inflation returns to its 3% target, in keeping with its primary mandate to ensure price stability,” the central bank said in a statement.
The latest monthly inflation rate brought the average in the first five months of the year to 4.5%.
Core inflation, which excludes volatile food and energy prices, quickened to 4.1% in May from 3.9% in April.
Government data showed that the transport price index fell to 16.2% in May from the previous month’s 21.4%,with diesel and gasoline prices rising at a slower annual pace. Food inflation also fell, with prices increasing 5.8%from a year earlier in May, compared to6.1% in April.
—Reporting by Karen Lema, Mikhail Flores, Nestor Corrales; Editing by John Mair and David Stanway