PH May 2015 inflation eases to its lowest level in 20 years at 1.6 percent, the Bangko Sentral ng Pilipinas (BSP) reported yesterday. The rate falls within the lower end of the Bangko Sentral’s and market analysts’ expectations of 1.6 to 2.4 percent.
This brings the average five-month inflation rate to 2.2 percent, well within the target range of 2 to 4 percent for 2015 set by the BSP.
The May 2015 inflation is the slowest since 1995.
Despite the major slowdown in the May 2015 inflation, the BSP warned, however, that with the expected impact of the El Nino phenomenon on food prices and the uncertainty in the price of oil in the world market in the coming months, inflation may accelerate towards the end of the year.
In the meantime, the decline in the May 2015 inflation may be attributed stable food supply, lower fuel and power rates during the month.
“Ample supply of food items and lower electricity and fuel prices pulled down inflation to its lowest level in 20 years,”National Economic Development Authority (NEDA) Officer-in-Charge and Deputy Director-General Rolando G. Tungpalan said in a statement.
Core inflation, which excludes items such as food and electricity which are prone to volatility, likewise dropped to 2.2 percent from 3.1 percent a year ago and 2.5 percent in April 2015.
The NEDA also noted that except for Northern Mindanao, inflation in most of the country’s 18 regions decelerated during the month.
With the continued decline in inflation, the BSP is confident that the country’s economy will continue to grow solidly in spite of the unexpected slowdown during the first quarter of 2015. For the first three months of the year, the economy grew by only 5.2 percent, way below market expectations. However, the government is still very confident that the 7-8 percent Gross Domestic Product (GDP) growth target for 2015 will still be met or even surpassed.
In addition, the BSP is expected to maintain its monetary policy for the rest of the year, barring any unexpected fluctuations in the price of oil in the world market and severe impact of the El Nino on food supply and prices.