April inflation is slowest in 13 months

Inflation in April settled at its slowest pace in 13 months as the decline in fuel prices tempered the increase in the cost of other commodities and favorable farm output boosted the supply of some food products.

Consumer prices increased by an average 2.6 percent in April—the slowest since the 3 percent recorded in the same month last year—to bring down the average for the first four months of this year to 3 percent, the National Statistics Office reported Tuesday.

The latest four-month average stood at the bottom of the central bank’s official target range for the year of 3 to 5 percent.

According to Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas, price movements so far in the year gave comfort that, barring any unexpected developments, inflation would be modest at least over the short term.

“This turnout for the month was within the BSP’s forecast and confirms our outlook for manageable inflation over the policy horizon,” Tetangco said in a statement.

Data from the NSO showed that aided by the decline in fuel prices, the transport index contracted by 0.7 percent year-on-year in April to reverse the 0.5-percent annual increase in March. Similarly, prices of some food groups eased, among them farm oil and fats, which contracted by 7.9 percent in April from a 7.7-percent drop in March; and fish, which fell 0.5 percent in April from an annual increase of 1.2 percent the previous month.

Food products that registered year-on-year increases in prices were corn (from 1.6 percent in March to 0.1 percent in April); milk, cheese and egg (from 3.5 to 2.5 percent); fruits (from 4.5 to 4.2 percent), and sugar, jam, honey and chocolates (from 7.1 to 6.8 percent).

However, prices of rice and vegetables registered faster annual rates of increases. Rice prices rose 2.2 percent in April from 1.5 percent in March, while vegetable prices inched up by 1.7 percent in April from 1.4 percent the previous month.

Tetangco said the BSP would monitor domestic and external developments to see if there would be a need to adjust existing monetary policy to ensure inflation would stay within target.

He added that the central bank would assess the impact of the series of cuts in the yield on special deposit accounts (SDAs) as well as the latest developments in advanced economies to determine their impact on domestic inflation in the months ahead.

He said the BSP would work on helping keep inflation manageable and economic growth robust.

Since the start of the year, the BSP has cut the SDA rate three times for a total of 150 basis points to a historic low of 2 percent. The move was intended to encourage banks to withdraw some of their funds from the BSP’s SDA facility and use these for lending, which in turn, could cause economic activity to increase.