‘Inflation likely to dip below 3% in May’
DECLINING rice prices could cause the country’s inflation to decelerate further and settle at 2.8 percent in May, an ING Bank economist said on Tuesday.
In a statement, economist Nicholas Anthony Mapa said the rate of the increase in the prices of goods and services “is seen to decelerate further in the Philippines with rice prices falling.”
This came after the Philippine Statistics Authority (PSA) reported recently that inflation fell to 3.0 percent in April from 3.3 percent in March because of the lower prices of food and other commodities.
Latest PSA data showed that the average wholesale price of well-milled rice slid to P39.51 per kilo month-on-month as of the second week of this month. Year-on-year, it also plunged by 3.9 percent from P41.12 per kilo.
It also showed that the average retail price of well-milled rice hit P43.16 per kilo, down 0.3 percent from a week ago and 1.7 percent a year earlier.
The average wholesale price of regular-milled rice dropped by 0.5 percent to P35.82 per kilo week-on-week. Year-on-year, it was down 5.22 percent from P37.77 per kilo. On the retail side, it was P38.74 per kilo, down 0.6 percent a week ago and 3.6 percent a year earlier.
As a commodity in the CPI (consumer price index) basket, rice commands 9.8 of the total and was one of the main reasons for the 2018 inflation pop that saw price gains top 6.7 percent,” Mapa explained.
“Bad weather and delayed importation both contributed to the price spike, which saw the BSP rattle off a series of aggressive rate hikes that have since begun to sap the growth momentum of one of the region’s fastest growing economies,” he added.
But “with government proactively importing food stuffs [and] the El Niño dry spell in effect, we can expect food prices to remain stable for the next few months,” the economist said.
According to him, ING expects inflation to “be tame” for the rest of the year.
“The May figure could fall below the BSP’s inflation target of 3 percent, as fuel prices saw only marginal gains year-on-year, although utility costs are projected to be slightly higher for the said month,” Mapa said.
“And although global crude oil prices remain elevated (up 29.5 percent year-to-date), we’ve seen only a marginal effect on headline inflation given transportation’s 3.03 percent weight in the CPI basket,” he added.
The PSA will release official inflation data for May on June 5.
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