Faster price increases of food and non-alcoholic beverages, mainly due to El Niño and global disruptions, pushed inflation in April to its fastest in four months at 3.8 percent.
March inflation was at 3.7 percent. This brings the national average inflation from January to April to 3.4 percent, above the mid-range of the full-year target of between 2 and 4 percent.
Core inflation, which excludes selected food and energy items, slowed down to 3.2 percent in April from 3.4 percent in the previous month.
Claire Dennis Mapa, national statistician and civil registrar general, said the uptrend in the overall inflation in April was “primarily influenced by the higher year-on-year increase in the heavily-weighted food and non-alcoholic beverages at 6.0 percent during the month from 5.6 percent in March.”
“The faster annual growth rate of the transport index at 2.6 percent in April from 2.1 percent in the previous month also contributed to the uptrend of the overall inflation,” Mapa said.
Higher inflation rate was also noted in information and communication at 0.5 percent during the month from 0.4 percent in March, he added.
In contrast, Mapa said the following commodity groups registered lower inflation rates during the month: alcoholic beverages and tobacco; housing, water, electricity, gas and other fuels; furnishings, household equipment and routine household maintenance; health; recreation, sport and culture; restaurants and accommodation services; and personal care, and miscellaneous goods and services.
Mapa said food inflation at the national level rose to 6.3 percent in April from 5.7 percent in March.
“The acceleration of food inflation in April was mainly brought about by the year-on-year increase in the vegetables, tubers, plantains, cooking bananas and pulses index at 4.3 percent from 2.5 percent annual decline in the previous month. This was followed by fish and other seafood with an inflation rate of 0.4 percent during the month from an annual drop of 0.9 percent in March,” Mapa said.
Food inflation shared 57.9 percent or 2.2 percentage points to the overall inflation in April.
Inflation in the National Capital Region (NCR) decelerated to 2.8 percent from 3.3 percent.
Data showed the main driver to the slowdown of inflation rate in the area was the lower annual increment in housing, water, electricity, gas and other fuels.
Also contributing to the deceleration of inflation in the area was the slower inflation rate reported in the heavily-weighted food and non-alcoholic beverages.
Following the trend at the national level, overall inflation in areas outside NCR (AONCR) also showed an uptrend at 4.1 percent from 3.8 percent. The acceleration of inflation in the area was mainly contributed by the higher annual increase in the heavily-weighted food and non-alcoholic beverages. Also contributing to the uptrend of inflation in the area was the faster annual increment in the transport index.
Mapa said 13 regions in AONCR exhibited higher inflation rates, with the Bangsamoro Autonomous Region in Muslim Mindanao posting the highest inflation rate for the third consecutive month at 6.3 percent, while Region I (Ilocos Region) still registered the lowest inflation for the fourth consecutive month at 2.4 percent.
Within forecast
The Bangko Sentral ng Pilipinas (BSP), however, said the April inflation of 3.8 percent is “within the forecast range of 3.5 to 4.3 percent.”
“The inflation outturn is consistent with the BSP expectations that inflation could accelerate temporarily above the target range in the next two quarters of the year due to the possible negative impact of adverse weather conditions on domestic agricultural output and positive base effects,” Eli Remolona, BSP governor, said.
“Nonetheless, the BSP expects average inflation to return to the target range for full year 2024 and 2025,” he said.
Remolona said the risks to the inflation outlook continue to lean toward the upside.
“Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and global oil prices. Potential minimum wage adjustments could also give rise to second-round effects,” Remolona said.
The Monetary Board will consider the latest inflation and the first quarter gross domestic product outturn, among other information, in its upcoming monetary policy meeting on May 16, added Remolona.
“The BSP also continues to support the National Government’s non-monetary measures to address supply-side pressures on prices and sustain the disinflation process,” Remolona said.
On Monday, Remolona said the BSP has leeway to keep policy settings unchanged this month even if the April inflation reading comes in at 4 percent.
“The central bank remains hawkish, but a trend of 3 percent inflation in the coming months would give the central bank room to cut rates,” Remolona said.
“We are still hawkish because inflation is still high,” Remolona said, adding the base case for policy was a 25-basis-point rate cut in the fourth quarter or first quarter in 2025.
The BSP’s Target Reverse Repurchase (RRP) Rate remains at 6.50 percent. The interest rates on the overnight deposit and lending facilities also remain at 6.0 percent and 7.0 percent, respectively.
During last month’s meeting, Remolona said the risk-adjusted inflation forecast for 2024 has risen to 4.0 percent from 3.9 percent in the previous meeting. For 2025, the risk-adjusted inflation forecast is unchanged at 3.5 percent.
Top priority
As El Niño and global disruptions exert upward pressure on food prices, the National Economic and Development Authority (NEDA) said “the government has taken decisive action and prioritized measures to mitigate the effects of these extreme weather challenges.”
Arsenio Balisacan, NEDA secretary, said while April’s increase remains within the government’s target range, “it underscores the need for vigilance.”
“We are taking comprehensive measures to ensure food security amid geopolitical concerns and weather patterns worsened by climate change. The government’s major strategies aim to increase productivity, build the resilience of the agriculture sector, and improve the efficiency of food systems,” Balisacan said.
This thrust aligns with the Philippine Development Plan 2023-2028, emphasizing strategies and reforms to modernize the country’s agricultural and agribusiness sector.
“Meanwhile, we must augment local production during shortages to ensure an adequate food supply at affordable prices for all Filipinos. Food insecurity extends beyond economic strain–it directly impacts the well-being of all Filipinos. Failing to augment local production during shortages perpetuates poverty and exacerbates vulnerability,” said Balisacan.
“We prioritize food security, economic growth, and the welfare of our producers and consumers,” he said.
“Our actions aim to boost local production and prepare for any challenges in food supply and price upticks,” he added.
