Inflation slows to 6.1% in May

Inflation slowed for the fourth consecutive month in May as transportation and food prices fell, the Philippine Statistics Authority (PSA) reported on Tuesday.

The 6.1-percent result, down from 6.6 percent in April but still higher than the year-earlier 5.4 percent, fell within the Bangko Sentral ng Pilipinas' (BSP) 5.8 to 6.6 percent forecast for the month. It also matched the 6.1-percent median in a Manila Times poll of economists.

Core inflation, which strips out volatile food and energy items, slowed to 7.7 percent from 7.9 percent.

Year to date, headline inflation stood at 7.5 percent while core inflation was at 7.8 percent. It remained well over the Bangko Sentral ng Pilipinas' 2.0- to 4.0-percent target.

"[T]he downtrend of the headline inflation in May 2023 was primarily brought about by the annual decline in the index of transport at -0.5 percent from 2.6 percent ... in the previous month," the PSA said in a statement.

"The heavily-weighted food and non-alcoholic beverages also pulled down the overall inflation during the month with a lower inflation rate of 7.4 percent from 7.9 percent in April 2023," it added.

"The third main source of deceleration for the May 2023 inflation was restaurants and accommodation services, which registered slower inflation at 8.3 percent from 8.6 percent in the previous month."

The PSA noted that higher inflation rates were also seen in the indices of furnishings, household equipment, and routine household maintenance, which rose to 6.2 percent in May 2023 from 6.1 percent in April 2023.

Recreation, sport, and culture also increased to 4.9 percent in May from 4.7 percent in the previous month.

Food inflation at the national level eased to 7.5 percent in May from 8.0 percent in April. This was primarily due to lower annual growth in prices for fish and other seafood of 5.0 percent from 7.0 percent.

"This was followed by meat and other parts of slaughtered land animals with an inflation rate of 3.2 percent in May 2023 from 4.2 percent in the previous month," the PSA said.

"The third primary driver of slower food inflation was milk, other dairy products, and eggs, which recorded a lower inflation rate of 12.1 percent in May 2023 from 13.0 percent in the previous month," it added.

Inflation in the National Capital Region (NCR) moderated to 6.5 percent from 7.1 percent due to a "slower year-on-year increment in the transport index at 1.1 percent during the month from 4.3 percent in April 2023."

Inflation in areas outside the NCR fell to 6.0 percent in May from 6.5 percent the previous month, also owing principally to an annual decline in the transport index of -0.8 percent from 2.3 percent in the previous month.

Source: Manila times

Philippines central bank keeps rates on hold as inflation moderates

BSP keeps rates at 6.25%

Bangko Sentral ng Pilipinas (BSP) kept policy rates unchanged at 6.25%, in line with expectations of a pause. BSP has lifted policy rates aggressively over the past few months to deal with surging price pressures, but with headline inflation on the downtrend, Governor Felipe Medalla opted to refrain from tightening further.

Furthermore, the recently-released first quarter GDP report shows signs that growth momentum is fading, suggesting that the string of rate hikes are already taking their toll on the economy.

Headline inflation, which peaked at 8.7% year-on-year in January has since slowed to 6.6%YoY as of April, although core inflation remains elevated at 7.9%YoY. Meanwhile, BSP lowered its inflation forecast for 2023 and 2024 to 5.5% (6.0% previous) and 2.8% (2.9% previous) respectively.

Real policy rates likely to revert to positive territory this month

Bangko Sentral ng Pilipinas and PSA

Prudent pause

BSP opted to keep rates unchanged at 6.25% today but did leave the door open for potential action should data evolve in a manner that would require additional policy moves. The central bank did admit that risks to the inflation outlook are tilted to the upside, but it also believes that inflation will revert to target by the fourth quarter of 2023. BSP opted to carry out a “prudent pause”, retaining policy rates at restrictive levels to tackle elevated core inflation while also refraining from hiking rates given lower 2023 and 2024 inflation forecasts. We expect BSP to keep policy rates steady in the near term while standing ready to tighten further should inflation trends reverse.

Meanwhile, Medalla also hinted at the much-anticipated reduction in reserve requirements (RR) as early as the June policy meeting. We expect the BSP to maintain policy rates at 6.25% in the coming months while reducing RR by 200bps to 10% in June.

Source: ING

Inflation, wages top concerns – survey

Inflation, affordable food and higher wages are the most urgent concerns among Filipinos, a nationwide survey conducted by OCTA Research showed.

Staying healthy remained a top personal concern, the survey, conducted from March 24 to 28, found.

OCTA said 57 percent of Filipinos want the government to rein in the prices of goods and services, 45 percent want salaries increased, and 44 percent long for affordable food like rice, vegetables and meat.

OCTA said the concerns of Filipinos spread out over different areas and socioeconomic groups.

In the Visayas, only 46 percent consider rising prices as an urgent personal concern.

But in the National Capital Region (NCR), the rest of Luzon and Mindanao, nearly six out of 10 respondents said stabilizing prices should be the government's top priority.

Majority of the respondents in the Visayas worry over access to affordable food (56 percent), compared to those in NCR, Mindanao (both at 38 percent), and the rest of Luzon (44 percent).

Those in the Class E socio-economic bracket are the most concerned by access to affordable food (52 percent), compared to 45 percent in the ABC bracket and 41 percent in the D bracket.

The study found that 57 percent in Class D and 67 percent in Class E also want the government to hold down price increases. In comparison, only 48 percent in Class ABC had the same concern.

Half of the respondents in NCR and 48 percent in Mindanao said the government should focus on increasing wages, as compared to those in Balance Luzon (44 percent) and Visayas (40 percent), respectively.

Class D (57 percent) and E (60 percent) were the most worried, and ABC was the least worried (24 percent).

The survey also showed that few consider controlling the spread of Covid-19 as an urgent national concern.

Fewer still want the government to pursue plans to amend the Constitution. Only one percent of those who participated in the survey expressed their belief that Charter change was an urgent national concern.

When it comes to personal concerns, keeping healthy and avoiding getting sick topped the list for 66 percent of respondents.

On the other hand, 51 percent said their biggest personal concern is to finish schooling or to be able to provide schooling for their children.

Half of those surveyed said having a secure and well-paying job or source of income is their number one concern.

Those in the NCR (78 percent), Balance Luzon (70 percent), and Mindanao (68 percent) were among those who wanted to stay healthy and avoid illness as their concern, as opposed to Visayas respondents (51 percent).

Class ABC (72 percent) and Class D (68 percent) were also concerned about staying healthy, compared to 53 percent in Class E.

Respondents in the Visayas were more concerned about finishing schooling or providing education for their children (59 percent), as opposed to those from the NCR (48 percent) Balance Luzon (47 percent) and Mindanao (52 percent).

Class ABC was also less worried about this personal concern (40 percent), as compared to Class D (51 percent) and E (56 percent).

Mindanao had the lowest percentage of those concerned about having a secure and well-paying job or source of income (35 percent), followed by respondents in the NCR (39 percent). Class ABC (38 percent) also had the lowest percentage among those who think this is a personal concern.

OCTA interviewed 1,200 respondents ages 18 years and above for the survey. It has a ±3 percent margin of error at a 95 percent confidence level.

Source: Manila Times