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BSP sees inflation above 5% in May

Pump prices have steadily increased since the start of the year. — PHILIPPINE STAR/ RUSSEL A. PALMA

HEADLINE inflation likely quickened and breached 5% in May due to higher pump and food prices and a weaker peso, the Bangko Sentral ng Pilipinas (BSP) chief said on Tuesday.

May inflation may have reached between 5% and 5.8%, BSP Governor Benjamin E. Diokno said in a Viber message. This is well above the 2-4% target of the central bank for this year.

The consumer price index last hit the 5% level in December 2018 and stood at 5.2% that month.

May inflation data will be released by the Philippine Statistics Authority (PSA) on June 7. Headline inflation was at 4.9% in April, the highest in more than three years.

“The continued increase in domestic petroleum prices, higher prices of key food items, and peso depreciation are the primary sources of inflationary pressures during the month,” Mr. Diokno said.

Pump prices of gasoline, diesel, and kerosene have jumped by P25.55 per liter, P29.10 per liter and P25.20 per liter, respectively, as of May 24 year to date, Energy department data showed.

PSA data also showed increases in the price of pork and vegetables in some trading centers in the first phase of May (May 1-5) versus the last phase of April (April 15-17).

Meanwhile, the peso remained at the P52-per-dollar mark in May, closing the month at P52.37 on Tuesday, down P1.37 or 2.69% from its P51 finish on Dec. 31, 2021.

These upward pressures could have been offset by lower electricity rates of Manila Electric Co. (Meralco), as well as the decline in rice and liquefied petroleum gas (LPG) prices, the BSP chief added.

Meralco said households will likely see a decrease of around P24 in their May electricity bill as distribution-related refund offset an increase in power generation charge. The overall rate went down to P10.063 per kilowatt-hour (kWh) in May from P10.183 per kWh in April.

Oil companies also cut the price of LPG by P5.73 to P5.75 per kilogram (kg) or about P63.03-P63.29 per 11 kg cylinder as of May 1.

On the other hand, average retail prices of special rice dropped by about 25 centavos to P4 in the first phase of May versus the second phase of April.

“Looking ahead, the BSP will continue to monitor closely emerging price developments to enable timely intervention to arrest emergence of further second-round effects, consistent with BSP’s mandate of price and financial stability,” Mr. Diokno said.

The BSP chief last week said they are likely to raise key interest rates by another 25 basis points at its next policy review on June 23 following a hike of the same magnitude at its May 19 meeting to curb growing inflationary pressures.

At the May meeting, the central bank upwardly revised its average inflation forecast for 2022 to 4.6% from the previous forecast of 4.3%, exceeding the 2-4% target band. For 2023, the BSP’s inflation forecast was hiked to 3.9% from 3.6% previously. — BVR