The inflation rate in April climbed to 4.9 percent from 4 percent a month ago, the fastest in more than three years, due to higher prices of food, transport, oil and electricity, the Philippine Statistics Authority said Thursday.
The April inflation was also faster than the 4.1 percent a year ago. The figure brought the average inflation rate in the first four months to 3.7 percent, or near the upper end of the target range of 2 percent to 4 percent.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said in an email to Manila Standard the April inflation was the fastest since 5.2 percent in December 2018. PSA said the rate was the highest “since January 2019 [of 4.4 percent].”
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the April 2022 inflation of 4.9 percent was within the BSP’s forecast range of 4.2 to 5.0 percent for the month.
“The inflation outturn is consistent with the BSP’s assessment that inflation will remain elevated over the near term due to the continued volatility in global oil and non-oil prices, reflecting largely the continued impact of the conflict in Ukraine on global commodities market,” said Diokno.
“Inflation could settle above the government’s target range in 2022, before decelerating back to target in 2023 as supply-side pressures ease. While there are signs that inflation expectation is higher for 2022, it remains broadly anchored to the target in 2023,” he said.
Diokno said inflation risks were tilted to the upside in 2022, but broadly balanced for 2023. Upside risks over the near term continue to emanate from the shortage in domestic food supply as well as from the potential impact of higher oil prices on transport fares.
Meanwhile, Diokno said the downside risks are linked mainly to the lingering threat of COVID-19 infections, as the emergence of new variants could temper the global economic recovery and prompt the reimposition of containment measures.
“Latest assessment also indicates that domestic economic activity has gained stronger traction with the easing of remaining mobility restrictions. However, heightened geopolitical tensions and a resurgence in COVID-19 infections in some countries have also clouded the outlook for global economic growth,” Diokno said.
He said the Monetary Board would review its assessment of the inflation outlook and macroeconomic prospects with the release of the first-quarter GDP growth figures, along with evidence of possible second-round effects and developments in inflation expectations during the monetary policy meeting on May 19, 2022.
Ricafort attributed the faster April inflation to the damage of typhoon Agaton in southern Philippines that temporarily led to higher prices of food and other basic commodities, on top of higher prices of imported commodities amid the Russia-Ukraine conflict for more than two months.
“As a result, year-on-year inflation could reach a little over 5 percent by May-June 2022 and could average at least 4.5 percent for full year 2022, especially if the Russia-Ukraine conflict drags on,” Ricafort said.
Ricafort said for the coming months, risk of second-round inflation effects would be monitored, especially if there were any upward adjustment on wages and transport fares, as these could trigger higher prices of other affected products and services in the economy.
PSA said the increase in the country’s inflation was mainly brought about by the higher annual increase in the index for food and non-alcoholic beverages at 3.8 percent; transport, 13.0 percent; and housing, water, electricity, gas, and other fuels, 6.9 percent.
Also contributing to the uptrend in the overall inflation during the period were the higher annual increments in the indices of alcoholic beverages and tobacco, 5.9 percent; clothing and footwear, 2.0 percent; recreation, sport and culture, 1.6 percent; and personal care, and miscellaneous goods and services, 2.3 percent.
Meanwhile, annual upticks slowed down in the indices of health at 2.4 percent; and restaurants and accommodation services at 2.8 percent.
Following the trend at the national level, inflation in the National Capital Region rose to 4.4 percent in April, from 3.4 percent in the previous month. In April 2021, inflation in the region was observed at 2.4 percent.
Similar to the trend at the national level and in NCR, inflation in the provinces increased to 5.1 percent in April 2022, from 4.1 percent in March 2022. In April 2021, inflation in areas outside NCR stood at 4.5 percent.