Food, electricity, fuel prices rise

Updated June 5, 2019, 7:10 PM By Chino Leyco

https://business.mb.com.ph/2019/06/05/food-electricity-fuel-prices-rise/

Prices of food, non-alcoholic beverages, housing, water, electricity, and fuel products increased in May, triggering an increase in inflation rate for the first time in six months, data from the Philippine Statistics Authority (PSA) showed.

While the rate is still within the government’s target, the country’s headline inflation clocked in at 3.2 percent in May, faster than the 16-month low of 3.0 percent in April, but slower compared with 4.6 percent in the same period last year.

In May, food and non-alcoholic beverages saw their prices rise by 3.4 percent year-on-year, while inflation on some public utilities like water and electricity jumped by 3.3 percent.

Among the food groups, vegetable prices registered the biggest acceleration at 12.5 percent, followed by fruits with 4.6 percent, fish with 4.2 percent, while other cereals, flours, cereal preparation, bread, pasta, and other bakery products with 3.7 percent.

On the other hand, food products that were not classified increased by 6.8 percent.

“Faster price adjustments in food and non-alcoholic beverages drove the uptick in headline inflation as weak El Niño conditions persisted, and brought significant damage to the agriculture sector in the midst of the election period’s strong consumption demand,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

“El Niño is a recurring problem that requires an immediate and long-term response.  The country needs to have a more robust solution to mitigate the impacts of extreme weather conditions and climate change considering that the Philippines is prone to natural disasters,” he added.

Pernia also flagged the threat of the African swine fever (ASF) entering the country, the increase of rice prices in the international market, and the volatility in global oil prices as upside risks to inflation.

“With the possible global pork shortage and the ban on importation of pork products from ASF-affected areas, domestic production of livestock should be beefed up to meet household and commercial demand,” he said.

The cost of rice and corn, however, dropped by 0.7 percent and 2.8 percent, respectively, during the month.

On the other hand, slower increments were observed in the prices of alcoholic beverages and tobacco at 9.5 percent, transport at 3.5 percent; and restaurant and miscellaneous goods and services at 3.3 percent.

Excluding food and energy items, the core inflation inched up at a faster pace of 3.5 percent last month from 3.4 percent in April, but the rate was slightly slower compared with 3.6 percent in the previous year.

The research arm of the Bangko Sentral ng Pilipinas (BSP) had earlier forecast that inflation last month could range between 2.8 percent to 3.6 percent.

Similarly, inflation in Metro Manila was higher at 3.4 percent from 3.1 percent in April, but lower than 4.9 percent a year before, while the rate in areas outside the National Capital Region also increased by 3.1 percent from 3.0 percent.

The May inflation level brought the country’s first five-month average inflation at 3.5 percent, well within the Duterte administration’s target of 2.0 percent to 4.0 percent.