Inflation in May eased to 1.3 percent from 1.4 percent in April, marking the lowest level in over five years as prices of housing, utilities, and fuels declined.
The Philippine Statistics Authority (PSA) on Thursday reported that the May figure was just slightly higher than the 1.2 percent recorded in November 2019. It also fell within the Bangko Sentral ng Pilipinas' (BSP) forecast range of 0.9 to 1.7 percent.
The sharpest price drops were seen in housing, water, electricity, gas, and other fuels, which declined by 2.3 percent, down from 2.9 percent in April. Transport prices also slowed to 2.4 percent from 2.1 percent.
Similarly, restaurant and accommodation services posted slower inflation at 2 percent, compared to 2.3 percent the previous month.
National Statistician and Civil Registrar General Claire Dennis Mapa attributed the decline partly to falling rice prices, which saw inflation ease to 7.7 percent in May from 12.8 percent in January.
Mapa said rice prices are expected to continue dropping as the government sustains its P20-per-kilo rice program for vulnerable groups, including senior citizens, conditional cash transfer beneficiaries, and solo parents. These subsidized rice prices are available at Kadiwa Centers.
He added that market vendors also helped bring down rice prices, with regular-milled rice now sold at P43.14 per kilo from P51.11 per kilo year-on-year, and well-milled rice at P49.45 from P56.60 per kilo.
As a result, inflation among the country’s poorest households fell to 0 percent in May from 5.3 percent a year earlier.
Month-on-month inflation declines were also recorded in SOCCSKSARGEN, the Bangsamoro Autonomous Region in Muslim Mindanao, and Northern Mindanao.
However, food inflation nationwide held steady at 0.7 percent due to persistent high prices of meat, fish and other seafood, dairy products, and eggs.
The Department of Economy, Planning, and Development said the Department of Agriculture is accelerating pig vaccinations to control African Swine Fever and avert a supply crunch that could drive up meat prices.
Agriculture Secretary Francisco Tiu Laurel Jr. also said he expects an increase in fish imports by year-end, after the government approved longer importation timelines.
"The timeframes we set were too short, and many of the approved products were out of season in their countries of origin," he said.
Core inflation, which excludes volatile items such as food and fuel, remained steady due to higher costs in information and communication, recreation, and education, while flat prices in financial services prevented further increases.
HSBC Southeast Asia economist Aris Dacanay said overall inflation could stay low this year due to a surge in imported goods.
"There are three factors: China's disinflationary impulse as Chinese exporters sell their products in ASEAN instead of the US; low global oil prices as global economic growth slows; and soft global rice prices," he said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort projected inflation will stay below 2 percent until at least August.
Mapa warned, however, that prices in the services sector could rise if a proposed P200 increase in the minimum wage for private-sector workers is passed into law.
"This will mostly have an impact on services like personal care, although this item has only a small share in the total services sector. But there are lag effects, so we'll monitor," he said.
Philippine Chamber of Commerce and Industry chairman George Barcelon added that small and medium enterprises could face a 30 to 50 percent increase in operating costs, which they may pass on to consumers.