Inflation slips to 2.2% in April 2020 as virus freezes economy
MANILA, Philippines (3rd UPDATE) – Inflation decelerated to 2.2% in April 2020 as oil prices in the global market plummeted to historic lows and market activities hibernated amid the coronavirus crisis.
The latest figure announced by the Philippine Statistics Authority on Tuesday, May 5, is lower than the 2.5% registered in March 2020 and the 3% recorded in April 2019.
Year-to-date, inflation is at 2.6%.
Lower transportation costs at 6.1% was the main reason for the downtrend in April, the lowest rate recorded in the index since October 2015.
Slower annual markups were also seen in the following commodity groups:
- Alcoholic beverages and tobacco - 17.9%
- Clothing - 2.6%
- Housing and utilities - 0.3%
- Health - 2.8%
- Communication - 0.3%
- Restaurants and other services - 2.4%
Food and non-alcoholic beverages posted a higher annual increment of 3.4%.
Inflation in the National Capital Region eased further to 1.2% from 1.7% in March, due to lower transportation and oil prices.
Lower transport costs also pushed down inflation in areas outside the capital at 2.5% from 2.7%.
Economists of the Bangko Sentral ng Pilipinas (BSP) earlier projected April inflation would range from 1.9% to 2.7%, as lower oil prices and transportation costs offset rising prices of rice and other food items.
The BSP said in a statement on Tuesday that inflation could settle at 2% in 2020 and 2.5% in 2021.
"Domestic economic activity will likely follow a U-shaped recovery path. Growth is expected to accelerate back to the potential output growth in 2021 supported by the measures under the government's recovery plan," the central bank said.
Inflation settling within target gave the BSP room to aggressively cut interest rates by 125 basis points to 2.75% and the reserve requirement or the amount banks need to hold in their reserves by 200 basis points to 12% to support the economy.
But BSP Governor Benjamin Diokno noted they are likely to hit the brakes on monetary easing. – Rappler.com