Lockdowns temper April inflation
MANILA, Philippines — Lockdowns and a halt in public transport in areas under community quarantine tempered inflation for the fourth straight month this year in April, the Philippine Statistics Authority (PSA) reported on Tuesday.
Inflation, as measured by consumer price index, slowed to 2.2% year-on-year in April, down further from 2.5% the prior month and slower than 3% recorded same period a year ago.
The latest data fell comfortably within the Bangko Sentral ng Pilipinas (BSP)’s 1.9-2.7% forecast for the month. Average inflation for the first four months eased to 2.6%, also within BSP’s 2-4% annual target.
“The latest inflation number is consistent with the BSP’s prevailing assessment that inflation is expected to be benign over the policy horizon due to the adverse impact of the coronavirus pandemic on the domestic and global economy,” BSP Governor Benjamin Diokno told reporters in a Viber message.
The impact of the pandemic can easily be gleaned from PSA’s latest report. Statisticians noted how a 6.1% slump in transport inflation, “the lowest inflation since October 2015,” slowed down the consumer price uptick last month.
Transport prices, which include fares among others, deflated as public transport in Luzon and key areas in the Visayas and Mindanao was halted as part of government-initiated lockdowns to restrict movements and stem the coronavirus contagion.
As a result, consumer demand was crippled and with it comes subdued prices. This was evident in inflation across regions. In the National Capital Region (NCR), where the lockdown came two days earlier than the rest of Luzon, prices rose an annual 1.2% in April, down from 1.7% a month ago.
Outside NCR, consumer prices went up a faster 2.5% on-year, albeit still down from 2.7% previous month.
Across other goods and services, inflation have also tempered. The index measuring utility prices inched up 0.3%, down from 1.1% in March, as local pump prices followed a drop in global oil prices. Additional levies on oil imports taking effect this month may push prices up in the coming months.
Sub-indices in communication and restaurant and miscellaneous goods also decelerated to 0.3% and 2.4%, respectively, data showed. Bill payments had been deferred, while dining out has been prohibited under lockdowns.
The inflation gauge for alcohol and tobacco products, meanwhile, barely moved to 17.9% from 18% month-on-month.
On the flip side, the heavily weighted food prices rose an average of 3.4% in April, faster than the 2.6% the previous month.
With inflation becoming less of a problem for policymakers, Diokno said BSP “stands ready” to funnel more credit support to the economy, expected to contract this year due to the pandemic. For the past two months under lockdown, The central bank already cut policy rates by 100 basis points and bank reserves by 200 bps.
“The BSP reiterated its support for urgent and carefully coordinated measures with other government authorities to ease the spillover effects of the pandemic on people and firms, with a view towards preventing any long lasting economic and social damage,” the governor said.
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