Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday inflation in April likely accelerated from 4 percent n April on higher prices of food, oil and electricity.
Diokno said in a message to reporters the April inflation was expected to settle within a range of 4.2 percent to 5.0 percent.
“Higher electricity rates in Meralco-serviced areas, increased domestic petroleum prices as well as higher meat and fish prices are the primary sources of inflationary pressures during the month,” he said.
He said inflation pressures could also emanate from positive base effects.
“These could be offset in part by lower prices of fruits and vegetables and the broadly stable peso,” Diokno said.
He said the BSP would continue to monitor emerging price developments and possible second-round effects to help achieve its primary mandate of price stability that is conducive to balanced and sustainable growth of the economy.
Inflation in March accelerated to a five-month high of 4 percent from 3 percent in February, driven by higher food, transport and fuel prices.
This brought the average inflation in the first quarter to 3.4 percent, above the midpoint of the target range of 2 percent to 4 percent this year. In the first quarter last year, inflation averaged 4 percent.
Diokno earlier said monetary authorities might consider raising interest rates from the record-low of 2 percent by June, amid the improvements in key economic indicators such as the gross domestic product and sustained manageable inflation environment.
The BSP kept the policy rate at 2 percent since November 2020.
Diokno said in an interview with Bloomberg Markets and Finance the economy rebounded by 5.7 percent last year from a contraction of 9.6 percent in 2020.
“The economy is seen to grow between 7 and 9 percent this year,” he said, citing the improvement in manufacturing and foreign direct investments.
“Our next meeting will be on May ,19 and we will look at new data, and hopefully it will show a first-quarter growth of maybe around 6 to 7 percent. And on the basis of that, maybe we will wait another cycle and we have another meeting in June and maybe that is the time we will consider the increase in policy rate,” Diokno said.
Diokno said there was no need for the Philippines to move in sync with the Federal Reserve’s expected aggressive increase in interest rates.
“What makes the big difference is the real interest rate in the US and the real interest rate in the Philippines. Our inflation is around 3 percent… In the US, it is around 8.5 percent. So given that, I think we can afford to wait as to what will be the move of the Fed in their next two meetings,” Diokno said.