MANILA, Philippines — Inflation in April rose to 7.2 percent – its highest level in over three years – driven by faster increases in food and transport costs linked to the Middle East conflict, according to the Philippine Statistics Authority (PSA).
Headline inflation, or the increase in prices of consumer goods and services, rose from 4.1 percent in March and 1.4 percent in April last year.
National Statistician Dennis Mapa said at a press conference that the April inflation print is “the highest since March 2023 wherein the inflation during that time was recorded at 7.6 percent.”
The 7.2 percent is also higher than the Bangko Sentral ng Pilipinas’ 5.6 to 6.4 percent inflation forecast for April.
The higher overall inflation result was driven by food and non-alcoholic beverages, which went up to six percent in April from 2.9 percent in March.
Food alone registered a higher inflation of 6.1 percent in April from the previous month’s 2.7 percent.
This was driven mainly by rice, which saw a faster increase of 13.7 percent from 3.5 percent in March.
Also driving the higher overall inflation result in April was the transport commodity group, which registered a higher increase of 21.4 percent in April from the previous month’s 9.9 percent.
From January to April, inflation averaged 3.9 percent, within the government’s two to four percent target.
Mapa said food items such as rice, fish and other seafood and vegetables are seen as risks that could drive up inflation.
“The risks that we see based on data will come from food,” he said.
He said there are also risks from the transport commodity group as prices are still higher compared to last year.
“Amid the Middle East conflict disrupting fuel supply chains, the government is intensifying targeted interventions, particularly to temper upward price pressures on food, energy and transport, while ensuring the continued stability of domestic supply,” Department of Economy, Planning and Development Secretary Arsenio Balisacan said.
Among the measures being implemented to address the impact of the Mideast crisis is the Unified Package for Livelihoods, Industry, Food and Transport (UPLIFT), which includes financial assistance for sectors affected by rising fuel prices.
In line with UPLIFT, the Department of Energy also continues to look for alternative energy sources, while developing local capacity for stable fuel supply.
“We remain committed to a whole-of-government approach in addressing the impact of the Middle East crisis. Our priority is to ensure stable fuel supply, manageable prices and adequate protection for all sectors amid ongoing domestic and global challenges,” Balisacan said.
For its part, the Asian Development Bank (ADB) said that the usual advice for central banks is not to raise interest rates when inflation is rising due to supply-side pressures.
“In the Philippines, that’s definitely the case…The Philippines is heavily reliant on imports of oil, especially from the Middle East, and as we know, there’s a real premium on getting oil now, and that has caused prices to rise faster than expected and led to the high inflation numbers there,” ADB chief economist Albert Park said in an interview with CNBC on the sidelines of the ADB Annual Meeting in Uzbekistan.
However, he said central banks may consider rate hikes if inflation becomes broad-based and price expectations change across the different goods and services.
While countries face fiscal pressure as they spend to cushion the impact of higher prices, he said that countries including the Philippines remain resilient.
“I think they may need some help getting through this period of adjustment, but the fundamentals still I think are in the right direction,” he said.
Last month, Fitch Ratings downgraded the Philippines’ outlook to negative from stable, signaling rising risks to its fiscal health.
“The Philippines is really making big investments in infrastructure, in renewable energy and so I think they’re on the right track. They just needed help dealing with this,” Park said.
He said ADB is helping countries cope with the crisis through increased budget support and other tools.
Targeted measures
To contain rising food prices, the Department of Agriculture (DA) said it has stepped up targeted measures, such as coordinating with other agencies to reestablish dedicated food lanes, removing toll fees for agricultural trucks and reducing port charges to speed up deliveries and cut logistics costs.
The agency noted that fuel subsidies have also been rolled out to ease the burden in the food supply chain.
“The DA’s Agribusiness and Marketing Assistance Division has intensified market monitoring, conducting more frequent visits to ensure retail prices remain within reasonable levels and to deter excessive markups,” the agency said.
Citing figures from the PSA, rice prices jumped to 13.7 percent from 3.5 percent in the previous month.
“Corn, fish and vegetables also posted faster increases, while cereals accounted for more than half of the rise in food inflation, highlighting how sensitive staple prices are to supply chain costs,” the DA said.
DA Secretary Francisco Tiu Laurel Jr. said that authorities are prepared to impose a P50-per-kilo price cap on imported rice if price pressures persist. — Josiah Antonio