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DOF sees inflation momentum receding despite higher May forecast

While they are still crunching the numbers, the Department of Finance (DOF) said it expects that May's inflation will even outpace that of the previous month.

In the DOF Economic Bulletin which was E-mailed over the weekend, it forecasted inflation in May to climb further to 4.9% year-on-year. This is even higher than the 4.5 percent inflation figure recorded in April.

But the DOF added that "inflationary momentum appears to be receding as the month-on-month change slows down from 0.5% in April to 0.3% in May."

Also noted was a continued uptick in the prices of certain food items last month. "Supply problems continued to affect food prices with vegetables accelerating to 1.4% month-on-month from negative levels since February while the levels of rice and fish are slowing down to 0.52% and 0.72%, respectively, " the DOF said.

However, the DOF explained that while "inflation appears to be rising year-on-year it is actually decelerating as the month-on-month inflation continues to drop."

"A meaningful drop in prices is attainable if the food supply problem is solved because food accounts for 35.5% of the consumer basket. Rice tariffication will help temper rice inflation while productivity programs for the food sector would enhance longer-term price stability," the DOF bulletin further stated.