THE worst may be over when it comes to high commodity prices as inflation is expected to slow starting in June, according to the National Economic and Development Authority (Neda).
Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the inflation rate of 4.6 percent in May could be the highest for the year.
“I don’t know [if inflation will be lower than 4.6 percent next month], but 4.6 percent at the most in the view of Central Bank could be the highest for the whole 2018,” Pernia said.
Inflation, Pernia said, is already slowing down and will enable the Central Bank to still meet the 2 percent-to-4 percent inflation rate target range for the year.
The month-on-month inflation rate has slowed in May to only 0.1 percent, from 0.2 percent in April; 0.5 percent in March; and 0.4 percent in February.
“That’s what we’re seeing, the acceleration [has slowed down], the rise in inflation has already slowed down,” Pernia said, speaking partly in Filipino.
In May inflation averaged 4.6 percent due mainly to high oil prices.
Finance Secretary Carlos Dominguez III, briefing reporters recently, had acknowledged that policy-makers apparently underestimated the global oil market’s spikes, and this compounded the impact of the Tax Reform for Acceleration and Inclusion law, which imposed higher excise taxes on fuel, among others. As a result, many sectors initially blamed the TRAIN law for the inflation uptick in April and May.
In a recent joint statement, the Neda, Department of Finance and the Department of Budget and Management pointed out that the increase in oil prices contributed 0.5 percentage points to the overall inflation rate in May 2018.
Taken together, other external and domestic factors made a joint contribution to the inflation rate of 0.7 percentage points, while the TRAIN contributed 0.4 percentage points, the three agencies said.
This means that for every additional peso being paid by Filipinos to account for the increase in prices, around 11 centavos was being paid for the higher cost of fuel; 15 centavos for other external and domestic factors; and nine centavos for the TRAIN cost.