BSP sees inflation at 1.3%-2.1% in April

Headline inflation may have settled below the 2-4% target band again in April, the Bangko Sentral ng Pilipinas (BSP) said.

The central bank’s month-ahead forecast showed that inflation likely settled within the 1.3%-to-2.1% range in April.

If realized, April inflation would be much slower than the 3.8% print logged in April 2024.

At the upper end of the BSP forecast, inflation likely accelerated from the near-five-year low of 1.8% in March.

On the other hand, the low end of the forecast showed inflation could have hit its lowest clip in over five years or since 1.2% in November 2019. It would also mark the third straight month of deceleration.

The local statistics agency is set to release April inflation data on May 6 (Tuesday).

“Easing prices of rice, fish, fruits, and vegetables, favorable domestic supply conditions along with lower oil prices and the peso appreciation contributed to the downward price pressures for the month,” the BSP said.

Rice inflation has been on the decline after the government slashed tariffs on rice imports in July last year and following the food security emergency declared on the staple grain this February. In March, rice inflation decelerated to 7.7%.

The peso closed at PHP 55.84 per dollar on April 30, its strongest finish in more than seven months or since its PHP 55.69 finish on Sept. 20, 2024.

It was also the first time the peso hit the PHP 55 level since it closed at PHP 55.965 on Sept. 26, 2024.

Pump price adjustments stood at a net decrease of P0.80 a liter for kerosene in April. However, it stood at a net increase of P0.40 a liter each for gasoline and diesel.

“These could be offset in part by the higher electricity rates and LRT-1 fares,” the central bank added.

Starting April 2, the boarding fare at Light Rail Transit Line 1 (LRT-1) was raised to PHP 16.25 from PHP 13.29, while the distance per kilometer fare was increased to PHP 1.47 from PHP 1.21.

Manila Electric Co. (Meralco) hiked the overall rate by PHP 0.7226 per kilowatt-hour (kWh) to PHP 13.0127 per kWh in April from P12.2901 per kWh in March.

“Going forward, the Monetary Board will continue to take a measured approach in adjusting the monetary policy stance in line with its price stability objectives conducive to balanced and sustainable growth of the economy and employment,” the BSP said.

In April, the BSP resumed its rate-cutting cycle with a 25-basis-point (bp) rate cut. This brought the benchmark to 5.5%.

The Monetary Board had delivered a pause at its first policy review of the year in February as it waited to see how global trade policies would unfold.

BSP Governor Eli M. Remolona, Jr. has said there is room for further easing this year, but this will likely be delivered in “baby steps.”

The central bank earlier said risks to the inflation outlook have also eased and remained “broadly balanced” until 2027.

Accounting for risks, inflation is expected to average 2.3% in 2025, 3.3% in 2026, and 3.2% in 2027.

For the first quarter, inflation averaged 2.2%. — Luisa Maria Jacinta C. Jocson