Philippine inflation slows in April, builds case for a rate pause
Reuters
Published May 04, 2023 10:39PM ET
Updated May 05, 2023 01:01PM ET
By Neil Jerome Morales and Enrico Dela Cruz
MANILA (Reuters) - Philippine annual inflation was on track to settle within the government's 2% to 4% target in the fourth quarter after it eased further in April, officials said on Friday, building the case for pausing interest rate hikes.
The consumer price index rose 6.6% in April from a year earlier thanks to lower food prices, marking the slowest pace of increase since August, while month-on-month inflation posted zero percent growth for a second consecutive month.
Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said the month-on-month inflation trends "present an even stronger argument" for keeping interest rates unchanged at the central bank's meeting on May 18.
With inflation slowing for a third straight month in April, the BSP said it was likely the pace of consumer price increases would "revert towards the target range by end-2023".
"The recent decline in inflation provides the BSP some flexibility for monetary policy, even as it remains vigilant against potential risks to the inflation outlook," the BSP said in a statement.
To tackle inflation, the BSP has raised interest rates by 425 basis points to 6.25% since last May.
Robert Dan Roces, chief economist at Security Bank said he expected the central bank would keep rates on hold this month, but added the BSP would want another round of data before deciding to end its hiking cycle.
Core inflation, which excludes volatile food and fuel items, slowed slightly to 7.9% from March's 8.0%.
The BSP, which projected April inflation at 6.3% to 7.1%, said last month it might pause its 10-month tightening cycle if inflation slowed further in April.
Upside risks to inflation remained given the threat of an El Nino weather pattern and the resurgence of African Swine Flu, the economic planning agency said in a statement.
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Written By: Reuters
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