HEADLINE inflation is likely to ease further to 2 percent in the second quarter of this year from the first three months due to persistent “disinflation pressures,” ING Bank Manila said in a commentary.
Tim Condon, ING Bank Asia chief economist, said supply shocks via the food and energy components explain most of the slowdown in the year-to-date inflation rate in the first four months of the year.
Headline inflation for April slowed to a 20-month low of 2.2 percent, bringing down the average rate for January to April to 2.3 percent.
The Bangko Sentral ng Pilipinas (BSP) defines headline inflation as the rate of change in the consumer price index or CPI, which is a measure of the average price of a standard “basket” of goods and services consumed by a typical family.
The deceleration in April was driven largely by the slower increases in food prices. In particular, food inflation eased as most commodities—particularly rice, corn, meat, milk, oils, and fruits —posted lower price increases due to ample domestic supply.
Likewise, non-food inflation eased slightly as a result of the continued decline in electricity rates and domestic petroleum prices in year-on-year terms, as well as the slower price increases in clothing and footwear items, health-related products and services, and restaurants and miscellaneous goods and services.
“Based on the disinflation drivers, we expect inflation to break through the bottom of the BSP’s 2-4 percent target range in the current quarter and remain there until the third quarter, when typhoon-related food supply disruptions typically cause a spike in the food component,” Condon said.
Growth in the consumer price index slowed to 2.4 percent in the first quarter from 3.6 percent in the quarter earlier and from 4.1 percent in the first quarter of 2014.
Full-year inflation is projected by the central bank at 2.2 percent, down slightly from its previous forecast of 2.3 percent.