HEADLINE inflation or the overall inflation in the Philippines slowed down further to 6.1 percent in May 2023 from 6.6 percent in April 2023.
This is the fourth consecutive month of deceleration in the headline inflation in the country. Despite the decline, the inflation rate in May 2022 was still lower at 5.4 percent. The year-to-date average inflation rate, that is from January to May 2023, stood at 7.5 percent.
Among the 13 commodity groups, the 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 annual increase in the previous month. 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. 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.
In addition, the annual rate of alcoholic beverages and tobacco index slowed down to 12.3 percent during the month.
Meanwhile, higher inflation rates were observed in the indices of furnishings, household equipment and routine household maintenance at 6.2 percent in May 2023 from 6.1 percent in April 2023; and recreation, sport and culture at 4.9 percent during the month from 4.7 percent in the previous month.
The indices of the following commodity groups retained their previous month’s annual growth rates:
a. Clothing and footwear, 5.1 percent;
b. Housing, water, electricity, gas and other fuels, 6.5 percent;
c. Health, 4.1 percent;
d. Information and Communication, 0.7 percent;
e. Education services, 3.6 percent;
f. Financial services, 0.0 percent; and
g. Personal care, and miscellaneous goods and services, 5.7 percent.
The top three commodity groups contributing to the 6.1 percent headline inflation in May 2023 were the following:
a. Food and non-alcoholic beverages with 46.0 percent share or 2.8 percentage points;
b. Housing, water, electricity, gas and other fuels with 22.9 percent share or 1.4 percentage points; and
c. Restaurants and accommodation services with 13.1 percent share or 0.8 percentage point.
2. Food Inflation
Food inflation at the national level in May 2023 at 7.5 percent also exhibited a downward movement for the fourth month in a row. In the previous month, food inflation was posted at 8.0 percent. However, despite the deceleration, the May 2022 food inflation was still lower at 5.2 percent.
The slower food inflation during the month was primarily influenced by the lower annual growth in fish and other seafood at 5.0 percent from 7.0 percent in April 2023. 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 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.
Lower inflation rates during the month were also noted in the indices of the following food items:
a. Corn, 5.9 percent from 8.4 percent;
b. Flour, bread and other bakery products, pasta products, and other cereals, 11.4 percent from 11.7 percent;
c. Oils and fats, 8.5 percent from 11.7 percent;
d. Fruits and nuts, 14.3 percent from 14.7 percent;
e. Sugar, confectionery and desserts, 31.6 percent from 33.7 percent; and
f. Ready-made food and other food products not elsewhere classified, 9.0 percent from 9.5 percent.
Meanwhile, compared with their previous month’s inflation rates, higher year-on-year growth rates were observed in the indices of rice at 3.4 percent from 2.9 percent; and vegetables, tubers, plantains, cooking bananas and pulses at 12.6 percent from 10.0 percent.
Food shared 42.5 percent or 2.6 percentage points to the overall inflation in May 2023. The following food groups were the top contributors to food inflation during the month:
a. Cereals and cereal products, which includes rice, corn, flour, bread and other bakery products, with 26.7 percent share or 2.0 percentage points;
b. Vegetables, tubers, plantains, cooking bananas and pulses, with 13.4 percent share or 1.0 percentage point; and
c. Milk, other dairy products and eggs, also with 13.4 percent share or 1.0 percentage point.
3. Core Inflation
The core inflation, which excludes selected food and energy items in the headline inflation, slowed down to 7.7 percent in May 2023 from 7.9 percent in April 2023. This brings the average core inflation from January to May 2023 to 7.8 percent. In May 2022, core inflation was observed at 2.8 percent
