Easing in power, fuel, grains prices slows down May inflation

Lower prices of fuel, electricity, rice and corn in May helped ease inflation to 4.3 percent in May, well within the government target of 3.5 to 5.5 percent, Acting Socioeconomic Planning Secretary Augusto Santos said.

The National Statistics Office (NSO) released the inflation figures for May last Friday.

Inflation for May was slightly lower than the previous month’s 4.4 percent due to the slower pace of increase in the fuel, light and water (FLW) index, based on a report from the NSO.

Core inflation, which excludes the prices of selected food and energy items, also decelerated to 3.8 percent in May from four percent in April.

Santos noted that electricity billings dropped by 6.5 percent in May as the price of power sourced from Independent Power Producers (IPPs) and the Wholesale Electricity Spot Market (Wesm) decreased.

In particular, Meralco’s generation charge declined by P1.26 per kilowatt hour as electricity brought from IPP and Wesm became cheaper.

“May fuel prices also declined by 0.3 percent compared to April as the weighted average retail price of petroleum products declined by P1.31 per liter from the previous month following the decrease in Dubai crude oil prices from $83.59 per barrel (bbl) in April to $80.18 per bbl in May,” Santos added.

On the other hand, the price of rice decreased by 0.3 percent in May due to the increase in the total rice inventory to 3.32 million metric tons.

“Despite the lower production of palay in the early months of 2010, total palay inventory increased by almost a fifth or 549,000 metric tons,” Santos said.

Additionally, seven out of the 16 regions outside the National Capital Region (NCR) posted negative month-on-month inflation rates for corn in May, resulting in a 0.5 decline in the price of the commodity.

Meanwhile, prices within the NCR went down by 4.6 percent in May from the previous month’s 5.3 percent increase due to adjustments in fuel and electricity prices.

In areas outside NCR, inflation slightly increased to 4.2 percent. –Daily Tribune