After 2.4% in Q1

BSP expects April inflation at 1.9-2.8%


THE central bank estimates headline inflation in April ranging between 1.9 percent and 2.8 percent, or within target, as it expects subdued rice prices to offset the mild rise in energy prices.

Official data will be released by the Philippine Statistics Authority on May 5.

“Forecasts by the BSP [Bangko Sentral ng Pilipinas] suggest that April inflation could settle within a 1.9 percent to 2.8 percent range,” BSP Governor Amando Tetangco Jr. said in a text message to reporters on Friday.

Tetangco said price pressures may have come from the upward adjustments in local pump prices of oil and power rates.

However, higher energy prices may be offset by the continued decline in rice prices, he added.

In March, headline inflation slowed to 2.4 percent from 2.5 percent in February, and from 4.1 percent recorded a year earlier.

“Moving forward, the BSP will continue to monitor emerging price trends and adopt appropriate policies in line with its commitment to the inflation target and in support of the country’s growth objectives,” Tetangco concluded.

CPI eases further in Q1

Meanwhile, the central bank’s quarterly report on consumer prices showed that headline inflation in the first three months of 2015 eased further given the slower increases in both food and non-food prices.

Growth in the consumer price index (CPI) slowed to 2.4 percent from 3.6 percent in the previous quarter and from 4.1 percent in the first quarter of 2014, the BSP said in its First Quarter 2015 Inflation Report.

“The continued deceleration in headline inflation was driven mainly by the slower increases in food prices resulting from adequate domestic supply. Non-food inflation likewise slowed down due to the decline in power rates and the price of domestic petroleum products,” the report said.

Ample food supply

During the quarter in review, the central bank report showed food inflation fell further to 5 percent from 6.6 percent in the previous quarter on ample domestic supply of all food items, except fruits.

The BSP said rice inflation eased further as the market remained well supplied due to additional harvests in a number of rice-producing provinces.

“Similarly, the continued decline in the prices of imported commodities such as sugar, vegetable oils, cereals, and meat contributed to the decline in food inflation,” it added.

Non-food inflation also decelerated further to 0.6 percent in January to March this year from 1.4 percent in October to December 2014 due mainly to lower prices of electricity, gas, and other fuels, and operation of personal transport equipment.

The BSP reported that inflation on electricity, gas, and other fuels declined on lower generation charges as well as price reductions in kerosene and liquefied petroleum gas.

Meanwhile, reduction in the pump prices of diesel and gasoline, which reflects declines in international oil prices, led to the fall in inflation in personal transport equipment, it added.

Baseline forecasts

The central bank also stressed that the latest baseline inflation forecasts show a lower but within-target inflation path over the policy horizon.
It noted that risks to the inflation outlook continue to be broadly balanced, supporting the assessment of a manageable inflation environment.

“Pending petitions for utility rate adjustments as well as potential power shortages are seen to pose upside risks to the outlook, while downside risks could stem from slower-than-expected global economic activity and pending petitions for transport fare reductions,” the BSP said.

Lastly, the central bank believes that domestic inflation pressures appear to be generally modest based on the further easing of headline inflation and other price indicators.

At the same time, it said international commodity prices, particularly of oil and cereals, are expected to remain soft amid favorable supply conditions.


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