5 June 2020
May Inflation Eases to 2.1 Percent
Year-on-year headline inflation eased to 2.1 percent in May from 2.2 percent in the previous month and was within the BSP’s expected range of 1.9-2.7 percent for the month. The resulting year-to-date average inflation rate of 2.5 percent was within the Government’s target range of 3.0 percent ± 1.0 percentage point for the year. Meanwhile, core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—was steady at 2.9 percent year-on-year in May. Month-on-month seasonally-adjusted inflation rose to 0.3 percent in May from -0.1 percent in April.
Headline inflation continued its downward path as inflation for both food and non-food items slowed down in May. Year-on-year food inflation decelerated as most key food items posted slower price increases, including meat and fish, while inflation for rice, corn, and sugar, jam, honey, chocolate, and confectionery remained negative in May. At the same time, non-food inflation slowed down in May due to lower electricity rates from reduced generation charges. Year-on-year transport inflation continued to be negative due to lower domestic petroleum prices.
The latest inflation outturn is consistent with the BSP’s prevailing assessment that inflation is expected to remain benign over the policy horizon due largely to the potential effect of COVID-19 on the domestic and global economic environment. Moving forward, the BSP will continue to carefully assess economic and financial developments, and stand ready to take necessary policy actions to safeguard its primary mandate of price stability.
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