May inflation eases to 2.9% as oil, food prices stabilize

MANILA, Philippines – As oil and utility prices dropped and food costs stabilized, the increase in prices of goods and services eased to 2.9% in May, the census agency said Tuesday, June 5.

From an inflation rate of 3% in April, the recent figure brought the 5-month average to 3%, which is within the government’s target range of 3% to 5% this 2012.

“On the other hand, the annual inflation in the National Capital Region (NCR) further slowed down to 2.2% in May from 2.5% in April. This was effected by the slower annual increments in the indices of housing, water, electricity, gas, and other fuels and restaurant and miscellaneous goods and services,” the census said in a statement.

“Annual inflation in Areas Outside NCR (AONCR) eased to 3.1% in May from 3.2% in April. The annual increases in the indices of housing, water, electricity, gas, and other fuels; health; transport; and education improved during the period,” it added.

Core inflation

However, stripping out volatile components, including food and energy items, core inflation slightly picked up to 3.7% in May from 3.6% in April.

The National Statistics Office just started computing the core inflation using new 2006 price base. They previously used the prices in 2000 as base.   

The following commodities, which account for 20% of the 2006-based index, are excluded in the computation of core inflation:

• Rice – 8.9% (weight in consumer price index)
• Corn -0.7%
• Fresh meat, chilled or frozen – 4.9%
• Fresh fruit – 1.5%
• Fresh or dried vegetables cultivated for their fruit – 1.2%
• Fresh or dried vegetables cultivated for their roots – 0.6%
• Natural gas, liquified or in the gaseous state – 1.5%
• Gas oils for motor vehicles – 0.7%

The Bangko Sentral ng Pilipinas, which considers core inflation for its monetary policies, expects prices to stay subdued for the rest of the year with a forecast of 3.1% in 2012 and 3.3% in 2013. – Rappler.com