The inflation rate in April stayed high at 4.5 percent, the same rate a month ago, as higher transport costs offset the easing of food prices, the Philippine Statistics Authority said Wednesday.
The April print, however, was still the second-fastest on a monthly basis in the last 28 months. It was also faster than the 2.2-percent inflation in the same month last year.
The PSA said the inflation averaged 4.5 percent in the first four months, above the target range of 2 percent to 4 percent set by the government.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the April inflation was within the BSP’s forecast range of 4.2 percent to 5.0 percent.
“The latest outturn is consistent with expectations that inflation would remain elevated this year, owing to supply-side pressures, before settling close to the midpoint of the target range in 2022,” he said in a message to reporters.
“The timely approval of the temporary cut in pork import tariffs is seen to help address supply constraints and ease price pressures going forward. In addition, inflation expectations remain well-anchored to the inflation target over the policy horizon,” he said.
Diokno said the balance of risks to the inflation outlook remained balanced around the baseline path in 2021, while leaning toward the downside in 2022. He said the pandemic continued to pose downside risks to the inflation outlook and growth prospects.
“However, improvements in external demand as well as the continued rollout of the government’s COVID-19 vaccination program and other stimulus measures will bolster economic recovery,” he said.
He said the Monetary Board would consider the latest price developments along with information from the first-quarter national income accounts in its review of the monetary policy stance on May 13, 2021.
ING Bank Manila senior economist Nicholas Mapa said inflation remained above the target for the fourth month. Inflation reached 4.2 percent in January, 4.7 percent in February and 4.5 percent in March.
“Inflationary pressures emanated from the index-heavy food component and transport costs. Food and beverage inflation hit 4.8 percent, down from 5.8 percent in the previous month, as pork prices were up 22.1 percent from the same level in 2020 while fish prices were up 6 percent,” Mapa said.
Meanwhile, transport costs edged higher with inflation for this sector accelerating to 17.9 percent from 13.8 percent, driven by a 48.4-percent increase in tricycle fares and the 32-percent rise in retail pump prices.
He said upside pressure on inflation remained confined to specific supply-side issues such as African Swine Fever for pork and global crude oil prices as well as pandemic-related health protocols that led to higher tricycle fares and restaurant food prices.
Demand-side pressures stayed muted with inflation for recreation and culture stuck in deflation (-0.6 percent) for a ninth straight month.
“Should price pressures continued to dissipate, we can expect inflation to decelerate as early as next month with 4.7 percent possibly the peak for the year,” Mapa said.
Mapa said the recent executive order related to pork importation “should help bring down pork prices in the near term while one-off adjustments to transport fares carried out in 2020 will soon wash out.”
“We expect BSP to remain on hold for the whole of 2021 to provide support to the economy, and we believe inflation will begin to decelerate further in May as supply side issues are addressed by supply side remedies,” Mapa said.