Consumer prices remain stable

CONSUMER prices likely remained at their most stable level in five years last April as the country continued to enjoy the effects of cheaper fuel as well as the steadier supply of food.

Economists from several banks said inflation for the whole year would also fall well within official target range set by the Bangko Sentral ng Pilipinas (BSP).

“We expect inflation to be on a downside trajectory for the coming months, with a rebound in the second half,” Metropolitan Bank & Trust Co. said in an email over the weekend.

Metrobank, together with Bank of the Philippine Islands (BPI), sees inflation at 2.4 percent in April, matching the five-year low posted in the first quarter of this year.

Singapore’s DBS, Southeast Asia’s largest bank, sees inflation at 2.6 percent in April.

The BSP earlier said April inflation could average between 1.9 and 2.8 percent.

Consumer prices data for April will be released on Tuesday.

All the bank forecasts fall within the BSP’s target range of 2 to 4 percent for 2015.

The BSP’s main goal is to protect consumers’ purchasing power by keeping prices stable.

“We are looking at a steady print … in April on the back of month-on-month increases in select food items (e.g., fish and vegetables), as well as transport and petroleum prices,” BPI lead economist Emilion Neri Jr. said in an email to the Inquirer.

“The slight decline in the price of rice between March to April, owing to improved inventories, was overshadowed by these factors preventing further deceleration of April inflation,” he added.

The forecast for stable inflation in April and throughout the year comes ahead of the BSP’s monetary policy meeting in the middle of May.

At the meeting, the BSP’s Monetary Board will decide on possible interest rate adjustments.

Benchmark rates set by the BSP influence private banks’ pricing of their own loans, which will affect demand and, in turn, consumer prices. The BSP’s overnight borrowing and lending rates currently stand at 4 and 6 percent, respectively. Both rates are half a percentage point each above record lows.

Apart from the collapse in fuel prices in the international markets, as well as the steadier supply of food locally, muted growth in the country’s money supply has also contributed to stable inflation.

In March, domestic liquidity, or M3, grew by 9.4 percent year-on-year. This was slightly faster than the 8.5-percent expansion in the country’s money supply registered last February.