High meat, fuel prices kept PH inflation elevated in April

The Philippines’ inflation rate remained at 4.5 percent year-on-year in April even as meat, especially pork, remained expensive while transport and fuel costs climbed amid normalizing global oil prices, the government reported on Wednesday.

As last month’s average pace of increase in prices of basic commodities matched that in March, headline inflation averaged 4.5 percent, which was still above the government’s 2-4 percent target range.

National Statistician Dennis Mapa told a press briefing that food and nonalcoholic beverages, transport, restaurant and miscellaneous goods and services contributed the most to inflation last month.

Food inflation, which accounted for the bulk of the consumer price index basket, rose 4.8 percent in April, mainly as meat prices soared 22.1 percent year-on-year. Mapa said pork prices jumped by a faster 57.7 percent year-on-year last month compared to the 51.8-percent increase in March as the price cap imposed by President Duterte lapsed.

In response, the central bank said the latest inflation figure “is consistent with expectations that inflation would remain elevated this year” owing to supply-side pressures, before settling close to the midpoint of the target range next year.

In a statement, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said “the balance of risks to the inflation outlook remains balanced around the baseline path in 2021, while leaning toward the downside in 2022.”

To bring down pork prices, President Duterte slashed tariffs and hiked the minimum access volume quota to augment domestic supply with more imports amid the African swine fever scare.

Mapa said rising global oil prices also spilled over locally, such that transport inflation climbed 17.9 percent year-on-year last month.

In particular, petroleum and fuel prices increased 32 percent, such that tricycle and jeepney fares jumped 48.4 percent and 6.3 percent, respectively, last month.

The Department of Finance, the National Economic and Development Authority, and private-sector economists earlier flagged oil prices as an upside risk to inflation in the near term as the global economy rebounds from last year’s recession.

Month-on-month, consumer prices in April were only 0.1-percent higher than the March level, as prices in areas outside Metro Manila inched up by a faster 0.2 percent.

In Metro Manila, prices declined by 0.3 percent in April compared to March levels, steeper than the 0.2 percent posted in the previous month.

However, PSA data showed that health inflation in April picked up by 0.3 percent month-on-month compared to the 0.2-percent uptick in March mainly as the cost of medical services and tests rose, Mapa said.

Some medicines and laboratory services were more expensive last month than in March, Mapa said, as he pointed out that health expenditures remained small or only 3.9 percent in the total basket of goods and services that Filipinos regularly consumed.

These price hikes nonetheless happened at a time when more stringent lockdowns were reimposed in National Capital Region Plus—Metro Manila and four neighboring provinces accounting for half of the economy—amid a surge in COVID-19 infections.

Inflation among the bottom 30-percent income households in April eased to 4.9 percent year-on-year from 5.5 percent in March due mainly to minimal prices hikes in rice and vegetables, Mapa said.

However, the four-month average inflation rate among poor Filipino families was 5.2 percent or higher than the nationwide rate, which meant they had to shell out more whenever they bought basic necessities.

For his part, Diokno said inflation expectations remained “well-anchored” to the inflation target over the policy horizon.

“The ongoing pandemic continues to pose downside risks to the inflation outlook and growth prospects,” the central bank chief said. “However, improvements in external demand as well as the continued rollout of the government’s COVID-19 vaccination program and other stimulus measures will bolster economic recovery.”