The Bangko Sentral ng Pilipinas said Tuesday inflation in April likely slowed to as low as 2.7 percent from 3.3 percent in March on lower rice prices and strengthening of the peso.
The BSP Department of Economic Research expects the April inflation rate to settle within the 2.7-percent to 3.5-percent range.
“Higher domestic oil prices and the slight upward adjustment in electricity rates are seen to provide upside price pressures for the month. However, these pressures may be partly offset by the continued decline in rice prices and by the peso appreciation,” it said.
The local currency strengthened and returned to the 51-per-dollar level on April 10 when it closed at 51.9, tracking the movements of most Asian currencies. The peso closed Tuesday at 52.105 against the dollar.
The central bank said it would continue to closely monitor evolving price trends and undertake necessary measures toward its commitment to price stability.
Inflation slowed to 3.8 percent in the first quarter 2019 from 5.9 percent in the last quarter of 2018 due to the improvement in food supply conditions, the bank said during the first quarter inflation briefing last week.
The headline inflation in the first quarter was within the national government’s target range of 2 percent to 4 percent for the year.
The BSP said the lower inflation during the quarter mainly reflected the significant deceleration in food inflation amid improved supply conditions. Similarly, core inflation declined to 3.9 percent in the first quarter from 4.9 percent in the previous quarter.
BSP Assistant Governor Francisco Dakila Jr. said inflation continued to be on the downward trend in the past few months after peaking to a nine-year high of 6.7 percent in September and October 2018.
“It will be one of the main factors to be considered in the possible forecast revision of inflation,” Dakila said during the first-quarter inflation briefing held at the Bangko Sentral Friday.
He also said the possible prolonged El Niño phenomenon or dry spell could be another factor to be considered for the revision.
“There is a 50-50 percent chance that El Niño will continue until the second half of the year,” Dakila said.
“These are all going to be considered in the next revision of inflation forecast [in the coming Monetary Board meeting],” he said.
The Monetary Board on March 21, 2019 kept the benchmark interest rates steady at 4.75 percent amid the deceleration in inflation rate. The interest rates on the overnight lending and deposit facilities were held steady.
The board reduced the inflation target this year to 3 percent from the previous estimate of 3.1 percent made in the Feb. 7 meeting. The forecast for 2020 was kept at 3 percent.