BSP sees May inflation slightly up with higher oil, food prices

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Metro Manila (CNN Philippines, May 29) – Inflation may have slightly picked up in May due to higher costs of oil and farm products, the Bangko Sentral ng Pilipinas said Friday.

BSP Governor Benjamin Diokno said latest projections of the central bank's Department of Economic Research pegged the price increase for basic goods at 2.3 percent, or a range of 1.9-2.7 percent.

If realized, this figure is faster than the 2.2 percent pace in April, but is still slower compared to the 3.2 percent reading in May 2019.

"Higher domestic oil prices as well as the uptick in the prices of various agricultural products due to supply bottlenecks and the impact of Typhoon Ambo contributed to positive price pressures during the month," Diokno said in a statement.

Inflation keeps track of the prices of oil, rice, utilities, and other essential items. The central bank expects full-year price increases to log between 1.75-3.75 percent, factoring in softer economic activity amid the COVID-19 pandemic. 

Retail pump prices have risen this month following the decision of the Organization of the Petroleum Exporting Countries for production cuts, following a plunge in world crude rates since March. Meanwhile, the weekend typhoon that hit Eastern Samar and parts of Luzon and the Visayas may have affected farm output.

LOOK: Ambo leaves trail of destruction in Eastern Samar

On the other hand, the BSP said lower electricity rates charged by Meralco – which was recently under fire for surging power bills – helped temper inflation. The central bank said power rates actually went down for the month even as Meralco customers complained about their dues that doubled or even tripled.

RELATED: Meralco to give consumers four months to complete bill payments during ECQ

The Philippine Statistics Authority will release latest inflation data on June 5.

The government's economic team expects economic activity to remain more muted this quarter as lockdowns extended to two more months in Metro Manila, although restrictions have been eased starting mid-May. Authorities are now focused on boosting consumption and business activity, with proposed stimulus bills pending before Congress.