The Finance Department said over the weekend inflation likely inched up to 1.3 percent in April this year, bolstered by higher food prices.
Finance Undersecretary and chief economist Gil Beltran said inflation likely increased from 1.1 percent in March.
“The low price change is traced, among others, to comparatively lower electricity and fuel prices and moderate food price increase,” Beltran said in an internal economic bulletin.
Beltran said electricity rate in the franchise area of Manila Electric Co. in March was about 17 percent lower than the P11.04-per-kilowatt-hour average for a 300-kw monthly consumption in the same month in 2015.
Beltran said diesel prices went down by 36 percent to an average of P22.73 per liter in the first three weeks of April.
He said price stability was caused by lower electricity and fuel prices, which would continue to give policy makers room for maneuver in addressing macroeconomic volatilities.
The Finance Department’s forecast was well within the Central Bank’s inflation forecast of 0.7 percent to 1.5 percent for April 2016.
“The BSP forecast suggests that April inflation could settle within the 0.7 percent to 1.5 percent range,” Central Bank Governor Amando Tetangco Jr. said earlier.
Inflation picked up to 1.1 percent in March from 0.9 percent in February. Data for April is scheduled to be released by the Philippine Statistics Authority on May 5.
Tetangco said he remained confident of the appropriateness of the current policy settings despite the developments here and abroad.
“The Fed action of keeping rates on hold was broadly in line with expectations,” Tetangco said.
“For our local markets, we await the conduct of our national elections, although we don’t foresee significant changes in economic policy thrusts. At the moment, we really don’t expect any major developments cropping up that would necessitate a shift in our stance of policy,” Tetangco said.
The US Fed maintained interest rates between 0.25 percent and 0.5 percent, the rates it held since December 2015. The Fed said it would “carefully monitor actual and expected progress toward its inflation goal” as it evaluates when next to increase interest rates.
The Fed’s Open Market Committee, in a statement accompanying the decision, cited the strengthening in the labor market and improved household spending as positive signs.
Tetangco, however, said the market would continue to monitor changes in nuances and the balance of risk assessment from the Fed.
Tetangco also remained optimistic that inflation would be manageable in the coming months despite an expected acceleration in April.
“The BSP forecast suggests that April inflation could settle within the 0.7 to 1.5 percent range. Increase in domestic oil prices as well as in power and water rates pose inflation pressures during the month,” Tetangco said in a text message.
Tetangco said going forward, Bangko Sentral would continue to monitor possible price pressures to ensure price stability conducive to balanced and sustainable economic growth.
Inflation averaged 1.1 percent in the first three months, below the government’s 2 percent to 4 percent target range for the year.