By Katherine K. Chan, Reporter
ELEVATED oil prices continued to feed into food and utility costs, pushing annual inflation to a three-year high of seven.2% in April, the Philippine Statistics Authority (PSA) said on Tuesday.
Faster-than-expected inflation now puts more pressure on the Bangko Sentral ng Pilipinas (BSP) which earlier signaled that it could keep mountaineering rates of interest as needed to temper inflation amid the oil crisis.
PSA data showed that the buyer price index (CPI) accelerated to 7.2% in April, from 4.1% in March and 1.4% a 12 months ago.
This was the fastest headline print because the 7.6% seen in March 2023, and in addition well-above the central bank’s 5.6%-6.4% estimate for the month.
It also blew past the estimates of 17 analysts in a BusinessWorld poll, where the median forecast was at 5.5%.
Month on month, inflation sped as much as 2.6%, the fastest because the 3.4% recorded in January 2000.
National Statistician Claire Dennis S. Mapa noted that faster price increases in food and nonalcoholic beverages, transport, and utilities drove the CPI higher last month.
April marked the second consecutive month that the headline print accelerated past the BSP’s 2%-4% goal.
As of April, inflation averaged 3.9%, a tad below the upper end of the BSP’s full-year goal.
Despite fuel price rollbacks, transport inflation was faster at 21.4% in April from 9.9% in March.
This as gasoline inflation quickened to 59.6% in April from 27.3% within the prior month and diesel to 122.7% from the revised 59.6% in March. This was the best reading for each petroleum products because the CPI rebasing in 2018.
Last month, fuel retailers implemented price cuts after back-to-back hikes because the Middle East war erupted in late February.
Month on month, pump price adjustments stood at a net decrease of P0.58 per liter for gasoline, P28.18 per liter for diesel and P17.71 per liter for kerosene.
As of end-April, the associated fee of gasoline ranged between P72.53 and P104.93 a liter, diesel from P75.93 to P101.96 a liter and kerosene from P125.39 to P147.98 a liter. These prices were still significantly higher than a 12 months ago.
Inflation for liquefied petroleum gas (LPG) surged to 45.8% in April from the revised 3.7% in March, whilst the federal government suspended the excise tax on LPG and kerosene.
Inflation for housing, water, electricity, gas and other fuels also picked as much as 8.2% in April from the revised 4.7% the previous month.
In April, Manila Electric Co. raised electricity rates by 53.35 centavos per kilowatt-hour (kWh), bringing the general rate for the month to P14.3496 per kWh.
High fuel costs spilled over into food prices in April, bringing inflation for the heavily weighted food and nonalcoholic beverage index to six% from the revised 2.9% in March.
This was attributed to the 11.1% inflation in cereals and cereal products (from 3.6% in March); 9.4% in fish and other seafood (from 6.6%); and 10.4% in vegetables, tubers, and the like (from 7%).
Meanwhile, rice inflation remained in positive territory for a second month in a row, accelerating to 13.7% from 3.6% a month ago.
Based on PSA data, the common per-kilogram (kg) cost of local regular milled rice climbed by 15.95% to P51.53 within the second half of April from P44.44 a 12 months earlier. The value of well-milled rice also grew by 15.32% 12 months on 12 months to P58.88 from P51.06 per kg, while the value of special rice went up by 9.8% to P66.23 per kg from P60.32 per kg.
PESO DEPRECIATION
PSA’s Mr. Mapa noted that the peso depreciation also drove up inflation and weakened the peso’s purchasing power.
Last month, the local unit touched the P61-a-dollar level for the primary time, plunging to a brand new all-time low close of P61.567 against the greenback on April 29.
“Our diesel and gasoline are priced in US dollars, after all, that’s why it had an impact on the value, which in turn had a direct impact on our inflation rate and, after all, on the purchasing power of the peso,” Mr. Mapa said.
“So, the impact of the peso’s weakening contributed to the rise in the value of inputs, particularly those we import, and it has impacted the inflation rate, amongst others,” he added.
In keeping with the PSA, the purchasing power of peso, or the worth of every P1, continued to drop to a brand new record-low of 73 centavos in April. This brings the worth of P100 in 2018 to only P73 now.
The PSA also reported that core inflation, which strips out volatile food and fuel prices, picked as much as 3.9% in April from 3.2% in March and a couple of.2% a 12 months earlier. This was the best core print because the 4.4% logged in December 2023.
Within the National Capital Region (NCR), inflation quickened to five.5% in April from the revised 3.5% in March and a couple of.4% within the prior 12 months.
Inflation in areas outside NCR was also faster at 7.7% in April, from 4.2% a month earlier and 1.2% last 12 months.
Meanwhile, inflation for the underside 30% of income households accelerated to its fastest pace in over three years at 8.5% in April, from 4.2% in March and 0.1% in the identical month last 12 months.
In a press release, the Department of Economy, Planning, and Development said the administration is “intensifying targeted interventions,” after inflation sizzled last month.
“Amid the Middle East conflict disrupting fuel supply chains, the federal government is intensifying targeted interventions, particularly to temper upward price pressures on food, energy, and transport, while ensuring the continued stability of domestic supply,” Economy Secretary Arsenio M. Balisacan said.
MORE RATE HIKES?
Meanwhile, Chinabank Research said the BSP will likely hike rates anew but has limited room for aggressive tightening as rising inflation will soon drag economic growth.
It now projects the headline print to carry above 7% in the approaching months, with the full-year clip prone to end at around 6%.
“We expect the BSP to boost rates further. Nevertheless, elevated inflation will proceed to weigh on consumption and growth, constraining the BSP’s ability to hike rates aggressively and placing greater responsibility on the federal government to curb additional inflationary pressures,” Chinabank Research said.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort said the BSP could extend its rate-hike cycle, very like throughout the 2022 oil crisis triggered by Russia’s invasion of Ukraine.
“There may be a possibility of BSP rate hike/s, just like the previous cycle 4 years ago, in an effort nip inflationary pressures on the bud and higher manage inflation and forestall it from spiraling further… even when the unintended consequences include slowing down the economy,” he said in a Viber message.
At its April 23 meeting, the central bank ended its nearly two-year easing cycle with a 25-basis-point rate hike, which brought the important thing policy rate to 4.25%. This marked its first tightening move since October 2023.
BSP Governor Eli M. Remolona, Jr. at the moment said that they may hike rates as much as needed to maintain prices stable despite its expected impact on domestic growth.
The BSP sees inflation hovering above 5% for a lot of the 12 months to average 6.3% by end-2026. This was higher than its earlier forecast of 5.1%.
Meanwhile, Jose Enrique “Sonny” A. Africa, executive director of the think tank IBON Foundation, said the faster April inflation clip reflects lapses in the federal government’s response to the over two-month long energy crisis.
“The Marcos Jr. (administration) didn’t create the oil shock, but its refusal to chop oil taxes and control oil firm overpricing is ensuring that tens of hundreds of thousands of poor, low-income and middle-class Filipinos fully absorb it,” he said in a Facebook post on Tuesday.
“The newest inflation figures clearly underscore how the (government’s) response is just too slow, reaches too few, and offers too little,” he added.