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While consumer prices in the Philippines accelerated by 1.4 percent in April, the slowest rate in over five years, the inflation rate in Metro Manila hit 2.4 percent, faster than the national rate and the region’s highest in three months.
According to the Philippine Statistics Authority (PSA), the country’s inflation slowed further from the 1.8 percent recorded in March, which was the slowest in almost five years. Having exceeded March’s rate, April’s inflation rate marks the slowest since November 2019’s 1.2-percent rate, before the pandemic disturbed the country.
April’s figure fell significantly below the government’s target band of two percent to four percent, but within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 1.3 percent to 2.1 percent. Last month’s figure brought the average rate for the first four months to two percent.
Core inflation, which excludes selected food and energy items, remained at 2.2 percent during the period.
In a statement released on Tuesday, May 6, the PSA said the inflation eased at the start of the second quarter mainly due to slower price hikes in food and non-alcoholic beverages, which increased by just 0.9 percent compared to 2.2 percent in March.
Rice prices, which had the heaviest weight in the basket, continued to fall during the period, dropping by 10.9 percent from 7.7 percent in March. This marked the tenth straight month of deflation, driven by “to lower local farmgate prices and reduced landed cost of imported rice.”
Likewise, a steeper drop in transport costs also helped drive inflation down, with the transport index falling 2.1 percent year-on-year from a 1.1 percent decline in the previous month.
Meanwhile, the inflation rate for housing, water, electricity, gas, and other fuels jumped to 2.9 percent from 1.7 percent; while health increased to 2.4 percent from 2.2 percent. Alcoholic beverages and tobacco also increased slightly to 3.7 percent from 3.6 percent.
Alcoholic beverages and tobacco posted higher inflation rates, rising to 3.7 percent from 3.6 percent.
Although overall inflation in the entire country has improved, consumer price increases in the National Capital Region (NCR) were the highest in three months.
NCR inflation uptick
Inflation in Metro Manila climbed to 2.4 percent in April from 2.1 percent in March, snapping a three-month streak of slowdown.
According to the PSA, the uptick was mainly driven by a sharp increase in housing, water, electricity, gas, and other fuel costs. These collectively climbed 5.1 percent from 2.2 percent in the previous month.
Claire Dennis S. Mapa, PSA undersecretary and national statistician, said at a May 6 press briefing that the elevated inflation in Metro Manila was due to the spike in electricity prices, which accelerated to 5.4 percent from the deflation seen in the previous month.
Likewise, slightly faster annual increases were recorded in health and in restaurants and accommodation services.
‘More accommodative’
The BSP said in a May 6 statement that the April inflation figure supports its outlook of a manageable inflation environment due to the lower commodity prices and the central bank’s recent downward revision in its inflation forecasts.
Looking ahead, the BSP expects inflation risks to be broadly balanced over the next two years. It noted that potential price hikes in transport, meat, and utilities could push inflation up, while lower rice import tariffs and weaker global demand may help tame price aggression.
“On balance, the more manageable inflation outlook and the downside risks to growth allow for a shift toward a more accommodative monetary policy stance,” it said.
It recently slashed the key borrowing costs to 5.5 percent from 5.75 percent, citing the need to shield the local gross domestic product (GDP) growth from the threat of the “more challenging external environment.”
This risk, the BSP said, would “dampen global GDP growth and pose a downside risk to domestic economic activity.”
‘Effective’ policy
“The sustained slowdown in inflation, driven largely by the significant decline in food prices, is a positive sign that our policy interventions are working,” said Rosemarie G. Edillon, Department of Planning, Economy, and Development (DEPDev) undersecretary for planning and policy group.
Edillon vowed to continue implementing “strategies to vigilantly monitor price shocks and proactively temper inflationary pressures.”
Closely monitoring crop production and prices—especially heat-sensitive vegetables from the north—as part of efforts to manage food inflation is among the government’s measures through the Department of Agriculture (DA)
Edillon has called on all government agencies to continue pushing for “decisive coordination to ensure price stability, especially for essential commodities.”
“Our goal is not only to reduce inflation but to ensure that its benefits are felt by every Filipino household—through lower food costs and improved access to basic goods,” Edillon said.
