Inflation likely eased further in April – BSP

MANILA, Philippines —  Inflation is projected to settle within the 1.3 to 2.1 percent range in April, with a strong chance of the rate falling further below the two to four percent target of the Bangko Sentral ng Pilipinas (BSP), as easing food and fuel prices temper cost pressures.

The projection places April inflation potentially below or slightly above the 1.8 percent recorded in March. The Philippine Statistics Authority is scheduled to release the official inflation data on May 6.

In its month-ahead forecast released yesterday, the BSP said there are various factors that helped pull inflation lower in April.

“Easing prices of rice, fish, fruits, and vegetables, favorable domestic supply conditions along with lower oil prices and the peso appreciation contributed to the downward price pressures for the month,” the BSP said.

However, the central bank noted that upward pressures remain, including higher electricity rates and fare adjustments for Light Rail Transit Line 1, which may offset some of the downward trends in consumer prices.

Should inflation hit the lower end of the forecast range at 1.3 percent, it could represent the lowest inflation rate since October 2019, when the rate stood at 0.8 percent.

“Going forward, the Monetary Board will continue to take a measured approach in adjusting the monetary policy stance in line with its price stability objectives conducive to balanced and sustainable growth of the economy and employment,” the BSP added.

Metrobank chief economist Nicholas Mapa projected April inflation to come in at 1.9 percent, pointing to continued price drops in key staples.

“Rice deflation and slower vegetable costs are likely keeping inflation subdued, as will transport costs,” Mapa said.

“Electricity prices might offset some of the downward pressure,” he said.

According to Mapa, full-year inflation is projected to average 2.6 percent, comfortably within the government’s two to four percent target range.

However, the forecast is higher than the central bank’s risk-adjusted inflation forecast of 2.3 percent this year.

“Target-consistent inflation this year, next year and even into 2027 gives the BSP more than enough room to continue its easing cycle to help insulate the economy from fallout related to the ongoing tariff war,” he said, referring to external global risks.

Inflation has steadily slowed since the start of the year, giving policymakers more room to unwind restrictive borrowing costs.

The BSP has cut policy rates by a cumulative 100 basis points since beginning its easing cycle in August 2024, including a 25-basis-point reduction at the Monetary Board’s April meeting to support economic growth amid subdued inflation pressures.