April inflation well within gov’t range at 3%

Inflation picked up in April to 3 percent, from 2.6 percent the previous month, due to price hikes of most commodity groups, including the heavily weighted food basket.

Prices were reported to have increased faster in areas outside the National Capital Region.

Still, April’s inflation growth was well within the government’s target range of 3 to 5 percent.

In NCR, the rate of rise in consumer prices stood at 2.5 percent in April, slower than the 2.7 percent growth in March, due to slower gains in the indices for housing, water, electricity, transport, gas and other fuels.

Year-on-year, inflation in areas outside NCR went up 3.2 percent last month from 2.6 percent in March, with higher annual upticks in the prices of all commodity groups except in the communication and education indices.

Month-on-month, higher prices of items in the food group, particularly corn, fish, processed and canned meat, processed eggs, milk, selected fruits, and sugar, were noted in many regions including NCR. In addition, upward adjustments in land transport fares and charges for electricity rates were observed in selected regions including NCR.

The National Economic and Development Authority (Neda) said that there could be “slight” acceleration in the rate of price hikes in the coming months due to volatile oil prices. Still, Neda said, inflation for the whole of 2012 should stay within target.

Private economists agreed that inflation would not likely breach the government target as food price increases so far had been relatively tame.

Benjamin E. Diokno of the UP School of Economics said via e-mail that prices wouldn’t soar to new heights this year because of weak consumer demand.

“Unemployment remains serious while poverty has worsened (based on Social Weather Stations survey results). The prices of oil and oil products have stabilized, though at a higher than normal [level] because of persistent world crisis, especially in Europe and the United States. [The economies of] India and China, both heavy users of oil products, are expected to slow significantly,” Diokno added.

This is not to say, however, that inflation of 3 to 5 percent may not be a cause for concern, especially since the poor can be hurt by even mild price increases, Diokno said. He then urged the government to focus on job generation.

As for key rates, Diokno said the Bangko Sentral ng Pilipinas should wait until the first quarter economic numbers were in before adjusting its monetary policy.

Cid L. Terosa of the University of Asia and the Pacific said in a text message that the 3-percent inflation growth in April could signal the start of price increases particularly because demand for school-related products would soon pick up.

“The price increases in the coming months however will still be within the 3 to 4 percent range,” Terosa said, as he urged the government, through the Department of Trade and Industry, to closely monitor prices of various products.

In 2011, average inflation stood at 4.7 percent.