PHILIPPINE INFLATION is possible rose to 6.4% in April, driven by higher fuel, electricity and food prices amid the Middle East war, and a weaker peso, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.
In its inflation forecast for next month, the BSP said inflation is likely to increase from 5.6% to 6.4% in April from 1.4% published last year and 4.1% in March.
At the high end of the forecast, it is possible that inflation will rise to the highest speed in three years or from 6.6% in April 2023.
Finally, inflation will still be the fastest print in two years or from a clip of 6.1% in September 2023.
If the forecast comes true, April will mark the second month in a row that annual inflation was above the 2%-4% range.
April inflation is scheduled to be released on May 5.
“Inflation risks have increased amid mounting pressure from extremely high domestic fuel prices, rising prices of staple foods such as rice, fish, and meat, rising electricity costs and the depreciation of the peso,” said the central bank in a statement.
Gasoline prices remain high in April as conflict in the Middle East continues. The Philippines imports oil from all over the country, almost all of its oil comes from the Middle East.
Year to date, the price increase has reached P44.23 per liter of gasoline, P48.96 for diesel, and P57.99 for kerosene.
Electricity prices have also increased. Manila Electric Co. raised prices by P0.5335 per kilowatt-hour (kWh), bringing the total price to P14.3496 per kWh in April, accounting for higher production costs. linked to the depreciation of the peso.
The peso closed at P61.485 against the dollar on April 30, weakening by 73.7 centavos from its close of P60.748 on March 31. It hit a record low of P61.567 on April 29.
Meanwhile, rice prices continued to rise in April, with the average cost of milled rice rising 15.9% to P51.53 for the April 15 to 17 period from P44.44 last year.
The price of finely milled rice jumped 15.3% year-on-year to P58.88 per kilo, while the price of special rice rose 9.8% year-on-year to P66.23 per kilo.
“The expected decline in vegetable and fruit prices may help curb inflation, but sources of upward price pressure continue to warrant careful monitoring,” the BSP said.
The central bank said last week that it expects inflation to reach 6.3% this year and 4.3% next year, both above the tolerance band.
The BSP said it will remain vigilant and continue to monitor recent developments in the Middle East for its impact on inflation and economic activity.
Last week, the central bank raised its policy rate for the first time in two years, bringing the benchmark to 4.5%.
Meanwhile, ING Economics said Thursday it expects inflation in the Philippines to rise above 5% in April.
“This will be driven by the continued pass-through of high global oil prices to domestic prices and the emerging effects of the second round,” he said. “The high price of rice may also have an impact to food inflation.”
In a letter dated April 30, Metropolitan Bank & Trust Co. (Metrobank) said it expects inflation to drop to 5.6% in April, with oil leading the way.
“Given how important oil and fuel are to food production, oil inflation is likely to have an impact on food prices… In addition, Metrobank expects meat to enter a recession in April after two months of annual price declines, as oil prices begin to outpace the availability of meat products,” he added. – Justine Irish D. Tabile
