The Department of Finance said the economy continues to face inflationary pressures from both food and non-food items amid the lingering African swine fever and the ongoing war between Russia and Ukraine that affects global oil prices.
It said in an economic bulletin the African swine fever threatened food security, while the geopolitical tension in Ukraine has implications on both food and energy security.
“Moreover, avian flu outbreaks in parts of the country pose threats to the poultry sector. The country needs to repopulate decimated hog populations, momentarily supplement any shortfall with meat imports, and effectively contain the avian flu outbreak,” the DOF said.
It said that in the short-term, non-food price inflation would continue to be driven by developments in the global energy market. Dubai crude oil continued to hover high, averaging $102.68 per barrel in April, up by 64.6 percent from the same month last year, but down by 9.2 percent, month-on-month.
“The futures market for oil continues to be in backwardation [i.e., the spot price is higher than near-term futures contracts which are, in turn, higher than longer-term contracts], suggesting tight supply conditions and higher convenience yield associated with having on hand the physical commodity,” it said.
The DOF said higher energy prices in the world market ultimately get translated into higher local pump prices.
The general price level accelerated 4.9 percent in April, further picking up speed from the 4-percent increase in March. The April print came out higher than the economists’ median outlook of 4.6 percent.
Food price inflation jumped 2.75 percent in March to 3.96 percent in April. Rice price inflation remained relatively flat at 1.64 percent. The prices of other food items, however, increased at a faster rate: meat (from 2.92 percent to 4.21 percent); fish (from 4.31 percent to 5.0 percent), and; vegetables (from minus 0.09 percent to 9.19 percent).
Non-food price inflation also picked up pace from 4.98 percent to 5.43 percent on the back of continued global oil price hike. Inflation in the electricity and fuels sub-group saw continued acceleration from 17.40 percent to 19.90 percent, while that of the transport group gained speed from 10.33 percent to 13.01 percent.
Month-on-month, the general price level increased by 0.80 percent, higher than the 0.63 percent increase in March, on account of both food and non-food items.
Food price inflation accelerated from 0.18 percent to 0.71 percent with that of meat maintaining its pace at 1.58 percent and vegetables reversing its negative month-on-month price change from minus 4.75 percent to 0.79 percent.
Non-food price inflation remained elevated at 0.72 percent, albeit easing from the 1.08 percent price change in March.
The April 2022 inflation of 4.9 percent was also faster than the 4.1 percent a year ago. This brought the average in the first four months to 3.7 percent, near the upper end of the target range of 2 percent to 4 percent.