Inflation kicked up to its highest level in more than three years hitting 4.9 percent in April from four percent in March mainly brought about by the higher annual increase in the index for food and non-alcoholic beverages, transport as well as housing, water, electricity, gas, and other fuels.
This was the highest since the 5.1 percent booked in December 2018.
Inflation averaged 3.7 percent from January to April this year, still within the two to four percent target set by the government as recommended by the Bangko Sentral ng Pilipinas (BSP).
BSP Governor Benjamin Diokno said the inflation outturn for April was well within the central bank’s forecast range of 4.2 to five percent.
“The inflation outturn is consistent with the BSP’s assessment that inflation will remain elevated over the near term due to the continued volatility in global oil and non-oil prices, reflecting largely the continued impact of the conflict in Ukraine on global commodities market,” Diokno said.
According to the BSP inflation could settle above the government’s target range in 2022 before decelerating back to target in 2023 as supply-side pressures ease.
“While there are signs that inflation expectation is higher for 2022, it remains broadly anchored to the target in 2023,” Diokno added.
He explained inflation risks are also tilted to the upside in 2022, but broadly balanced for 2023.
Upside risks over the near term, he said, continue to emanate from the shortage in domestic food supply as well as from the potential impact of higher oil prices on transport fares.
On the other hand, Diokno pointed out downside risks are linked mainly to the lingering threat of COVID-19 infections, as the emergence of new variants could temper the global economic recovery and prompt the reimposition of containment measures.
“Latest assessment also indicates that domestic economic activity has gained stronger traction with the easing of remaining mobility restrictions. However, heightened geopolitical tensions and a resurgence in COVID-19 infections in some countries have also clouded the outlook for global economic growth,” he said.
The BSP chief added supply-chain disruptions could also contribute to inflationary pressures, and thus warrant closer monitoring to enable timely intervention in order to arrest potential second-round effects.
According to him, the central bank’s Monetary Board would review its assessment of the inflation outlook and macroeconomic prospects with the release of the first quarter gross domestic product (GDP) growth outturn, along with evidence of possible second round effects and developments in inflation expectations during the monetary policy meeting on May 19.