Inflation remains steady in April

MANILA, Philippines – The general rise in prices of basic goods and services  remained remained steady in April, within the target of the Bangko Sentral ng Pilipinas (BSP).

The Philippine Statistics Authority (PSA) on Friday, May 5, reported that inflation remained unchanged at 3.4% in April, bringing the average inflation in the first 4 months of the year to 3.2%.

The April inflation rate fell midpoint of the BSP’s inflation target for April, which is between 3% to 3.8%.

Excluding selected food and energy items, core inflation picked up by 3% in April from 2.9% in March.

Outgoing BSP Governor Amando Tetangco Jr said authorities would continue to monitor oil price developments, and the supply and demand of basic commodities like rice, and petitions on utility rate hikes. 

“The numbers confirm the manageable inflation outlook for the year. At the moment, we deem the policy settings to be appropriate, but we continue to monitor changes in commodity prices, particularly petroleum products as well as petitions for utility rate increases, which we see are possible risk factors to our baseline scenario,” Tetangco added.

The next rate-setting meeting of the BSP’s Monetary Board is scheduled on May 11.

The BSP has managed to adopt a dovish stance since September 2014 when it last raised key policy rates by 25 basis points.

In June 2016, the central bank slashed interest rates as part of an operational adjustment with the shift to the interest rate corridor (IRC) aimed at bringing market rates closer to the policy rates.

Inflation in the non-food group decelerated to 2.7% in April from 2.8% in March due to the sluggish price adjustments of electricity, gas, and other fuels.

This could be traced to the resumed operations of the Malampaya Gas Field after a two-month maintenance shutdown early this year.

Lower pump prices recorded for unleaded gasoline, diesel, kerosene, and LPG last month also contributed to slower non-food inflation.

Inflation in the food and non-alcoholic beverage group accelerated to 4.2% from 4%. Prices of staples such as rice, meat, and fish remained high due to supply constraints.

The annual change of the country’s food price index increased 4.3% in April from 4.2% in March due to higher upticks in meat and fish.

Data from the Philippine Statistics Authority (PSA) also showed the country’s declining inventory of commercial and National Food Authority (NFA) rice.

Rolando Tungpalan, officer-in-charge at the National Economic and Development Authority (NEDA), said the stable inflation rate in April was a respite from the upward inflation trend in the first 3 months that brought inflation to a 28-month high of 3.4% in March.

“Nevertheless, volatilities in oil prices and erratic exchange rates can still manifest into higher domestic prices for both food and non-food commodities,” Tungpalan said.

He added that possible increases in transportation fares and electricity rates in the coming months could exert upward pressure on prices, along with the transitory impact of the proposed tax reform program. – Rappler.com