Philippines: Inflation steps up in May
June 7, 2011
In May, consumer prices were unchanged over the previous month, following on the 0.58% increase observed in April. The result mainly reflected stable prices in housing and repairs as well as in services. Despite food prices adding 0.12% month-on-month, the increase was offset by a decline in prices in the fuel, light and water category (-0.42% mom). Due to the unfavourable base effect of May 2010, annual headline inflation stepped up from 4.3% in April to 4.5% in May. The reading represented the fastest pace since April 2010 and came in below market expectations of inflation accelerating to 5.0%. The annual core inflation rate, which excludes the price volatility associated with items such as oil and food, jumped from 3.3% in April to 3.7% in May. Annual average inflation, which is the reference rate used by the Central Bank to conduct monetary policy, inched up from 3.7% in April to 3.8% in May. Accordingly, annual average inflation is below the target rate of 4.0% (1% tolerance margin), set by the Bank for 2011.