Inflation Preview: Pork and power fuel still slow price rise  

Pork and electricity costs will be in the spotlight this month.

We forecast headline inflation to settle at 1.9% in April, a slight pickup from the preceding month’s 1.8%.

Food inflation stoked by pork, offset by rice

In recent months, pork was the major source of inflation, with prices rising sharply amid African Swine Fever.

To help curb prices, the government imposed a maximum suggested retail price (max SRP) beginning April. Despite this, data from the Department of Agriculture show that pork prices continued to increase and remained higher than the max SRP. We still expect pork to be among the main sources of inflationary pressure this month.

Meanwhile, fish prices fell in April from March, despite expectations of a price increase during the Holy Week when demand for seafood normally spikes. However, the cost of fish rose from the same month last year.

Similarly, vegetables and fruits also saw lower prices compared to last month but higher compared to the same period last year.

Amid the year-on-year price rise in most food commodities, rice costs, which comprise about 8.9% of the consumer price index, continued to drop in April. This will offset inflation in non-rice food commodities.

Sun’s up, power rates up

Electricity rates will play big in this month’s inflation. The Manila Electric Company (Meralco) announced an upward adjustment in its April electricity rate to PHP 13.0127 per kilowatt hour (kWh) from the preceding month’s PHP 12.2901 per kWh.

According to Meralco, the increase was due to higher generation and transmission charges.

Oil remains volatile, but prices still low

Oil prices saw mixed movements over the month, with two price rollbacks sandwiched between hikes in the first and fourth weeks. Volatility in the oil market comes from expectations of lower demand amid the ongoing trade war and a bleak global economic outlook, as well as anticipation of lower oil supply following new US sanctions on Iran.

Despite this, oil prices remain low compared to April last year and could help cool this month’s inflation.

Metrobank’s take

Although supply side pressure exists, headline inflation this month will remain below the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% target band, as price increases in other major commodity items remain subdued. This will provide room for the BSP to continue its monetary easing cycle in the June 2025 Monetary Board meeting.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.) 

MARIA KAILA BALITE is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. She holds a Master’s degree in Applied Economics and also majored in Financial Economics for her Bachelor’s degree, both from De La Salle University Manila. Outside of work, her interests include thriller movies, K-dramas, and dogs.