Inflation down 2.2% in April

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Inflation down 2.2% in April
Cutbacks in electricity, food, and fuel prices ease inflation in April

MANILA, Philippines – Decreases in food, fuel, and electricity prices slowed down inflation to 2.2% in April from 2.4% in March this year, the National Economic and Development Authority (NEDA) reported Tuesday, May 5.

The Bangko Sentral ng Pilipinas (BSP) reported April 24 that the first quarter inflation for 2015 eased at 2.4%, remaining within the government target range 3% ± 1.0 percentage point.

The latest headline inflation is also lower than the 4.1% recorded in April 2014.

“Low and stable inflation in January to April 2015, which averaged 2.3%, bodes well for consumption growth. It is also within the Development Budget Coordination Committee’s inflation target range of 2% to 4%,” said NEDA Officer-in-Charge (OIC) and Deputy Director-General Emmanuel F. Esguerra.

Core inflation, which excludes selected volatile food and energy prices, also fell to 2.5% from 2.7% in March 2015, and 2.9% in April 2014.

Core inflation in the first 4 months of 2015 averaged at 2.5%.

Slower price adjustments

Moderate inflation in the food sub-group (4% from 4.4%) lingered in April 2015, pulling down headline inflation, the Philippine Statistics Authority (PSA) reported.

The slowdown in food inflation can be attributed to slower price adjustments in rice, meat, and fruits.

Non-food inflation also slackened in April 2015 following continued rollbacks in electricity, gas, and other fuels. Rollback in domestic petroleum prices continued following the sharp decline in international oil prices since the last quarter of 2014.

Inflation in the National Capital Region (NCR) tempered to 1.5% in April 2015 from 1.9% in March 2015, and 3.3% in the same period a year ago, accounted for by slower inflation in several major commodity groups, including food and non-alcoholic beverages.

Outside NCR, inflation fell to 2.3% in April 2015 from 2.6% in March 2015 and 4.4% in April 2014.

NEDA also said the peso is expected to remain relatively stable given the country’s strong external position owing to strong remittances and foreign direct investment inflows, ample international reserves, and a manageable level of external debt.

“Overall, these conditions are seen to contribute to stable domestic prices going forward,” Esguerra said.

El Niño threat

But Esguerra noted potential risks to inflation, such as the current episode of mild El Niño in the country, should it intensify.

“Regular monitoring of drought incidence in agricultural areas should be continued to ensure that appropriate policy actions are implemented without delay,” Esguerra said.

Timely importation of rice to augment domestic supply should also serve as a ready measure to prevent the repeat of the high rice prices witnessed in the third quarter of 2013 until 2014, he added.

He also stressed the need to promote productivity increases in agriculture and the food processing industries.

“There should be programs to cover the use of appropriate technology to expand production capacity as well as intensification of credit programs and facilities with crop insurance,” he said.

The government should also continue to explore a more lasting solution to further decongest Metro Manila and avoid future disruptions in the domestic supply chain. –

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