The Philippines’ inflation rate in May 2014 accelerated to 4.5% year-on-year from 4.1% in April. This number is above the market consensus of 4.2% and on the high end of the Bangko Sentral ng Pilipinas (BSP)’s target inflation 3.9% to 4.7% for the month.
For the first 5 months of the year, inflation stands at 4.2%, within BSP’s full year target range of 3-5%. Core inflation likewise accelerated to 3.1% from April’s 2.9%.
Higher food and electricity prices
Inflation was again driven by the Food and Non-Alcoholic Beverages index which rose at a quicker pace of 6.7% year on year (vs. April’s 6.2%). Increase in the prices of rice from last year was around 20% in May, while prices of other fruits and vegetables remain elevated due to extreme heat caused by summer.
On an annual basis, higher electricity rates from higher generation charges caused the Housing, Water, Electricity, Gas, and Other Fuels index to inch up by 3.7% (vs. April’s 3.0%). On a month-on-month basis, consumer prices rose by 0.51%, a further pick up from April’s 0.44%.
Food prices once again led the increase in overall consumer prices by rising 0.66% (vs. April’s 0.53%) as the lean season continued to push food prices up. Meanwhile, the increase in energy prices was a little slower at 0.76% month-on-month (vs. April’s 0.77%) due to lower electricity rates charged by the power distributors driven by lower ancillary and transmission rates.
While year-to-date inflation is still within the BSP’s target, it is seen that inflation is steadily picking up. The BSP has long been signaling that rates may be adjusted given that the “room to keep rates steady has narrowed.”
Free Inflation Update special report
A complete and more detailed Inflation Report is available for download for free in PinoyInvestor.
The “Inflation Update and Outlook” special report is prepared by First Metro Securities, a brokerage firm under the Metrobank Group and one of seven partner brokers of PinoyInvestor.
Click here to register in PinoyInvestor for free. Members receive weekly Stock Reports with top picks, stock recommendations, and Target Prices, plus access to the PinoyInvestor Academy, a collection of investor education resources available with no charge.
Must read these other awesome, educational posts!
- “It’s Not Easy to Make Money in Stocks”
- Is stock market investing for you?
- Stock Picks and Brokers’ Stock Recommendations
1 thought on “May 2014 Inflation Analysis and Outlook”
Its just like you learn my thoughts! You seem to know a good deal approximately this, as you wrote the e-book using them or anything. I really believe that you just could use a couple of percent to force this content home slightly, however other than that, that is wonderful blog. An outstanding read. I’ll certainly return.