Inflation picks up in May - NSO

Consumer prices rose to a 13-month high in May, the government reported on Tuesday. The National Statistics Office said inflation rate climbed 4.5 percent in May. The last time the country had the same inflation rate was in April last year. "The national annual headline inflation went up to 4.5 percent in May from 4.3 percent in April. Higher annual growths were recorded in the indexes of clothing, fuel, light, and water (FLW) and miscellaneous items. Inflation during the same month a year ago was 4.3 percent," the NSO said. For the year's first five months, inflation rate in the country was at 4.2 percent. Meanwhile core inflation, which excludes volatile food and energy items, in May was 3.7 percent. The Bangko Sentral ng Pilipinas (BSP) has earlier said that it expects inflation in May to be anywhere between 4.5 percent and 5.5 percent. Earlier, the BSP raised its policy rates by a total of 50 basis points in March and May to counter the effects of inflation pressures on the market. BSP Deputy Governor Diwa Guinigundo said inflation for 2011 would have risen 5.6 percent this year if the Monetary Board did not hike its rates. The BSP has set a 3-percent to 5-percent inflation target for 2011. Higher BSP rates have the effect of reducing money supply, thereby easing inflation pressures. Previously, the BSP managed to keep interest rates stable for 20 straight months from July 2009 to March 2011 to counter the effects of sluggish global trade and economy. Economists and analysts said the BSP could again be raising its key policy rates on June 16, also to counter rising inflation. Towards the end of the year, Guinigundo said BSP's monetary policies continue to be appropriately balanced in support of non-inflationary growth. "From a monetary perspective, we believe inflation remains the major concern and continued vigilance of monetary policy is more than warranted," she added. Meanwhile, BSP Governor Amando Tetangco Jr. said the continued appreciation of the peso against the US dollar could cushion the impacts of inflation pressures in the coming months. "The BSP will continue to monitor developments to ensure that our stance for monetary policy remains appropriate," he earlier said. Tetango likewise disclosed that they are keeping a close eye on the impact of the tensions in the Middle East and North Africa and the disasters in Japan to the inflation and economic growth rates in the country. He earlier admitted that inflation rates in some parts of the year could breach BSP's targets due to the escalating oil and food prices in the world market. -- CMA/JMT/OMG, GMA News