go through Luisa Maria Jacinta C. Josen, Senior Reporter
Inflation may remain below 2% for the second straight month in April, analysts say Title picture in the bay.
one BusinessWorld In April, the median poll of 14 analysts was estimated at 1.8% (CPI).
This is within 1.3% to 2.1% of Bangkok's Sentral NG Pilipinas (BSP) this month.
If realized, inflation in April will be the same as March, but the 3.8% clip logged in from the same month of 2024 has slowed down.
This will also mark the ninth month of inflation within the BSP's 2-4% target range.
The Philippine Statistics Agency (PSA) plans to release inflation data for April on May 6 (May 6).
“Inflation may remain benign this month and may continue to do so in the coming months,” said economists at HSBC.
Slower food prices remained the biggest driver of low inflation in April, with Patrick M. Ella, an economist for Sun Life Investment management and trust companies, said.
Angelo B. Taningko, Vice President and Head of Research, Security Bank Corporation.
“As the global rice prices decline, capital's retail rice prices continue to decline. As global rice prices fall faster than retail prices, there is still enough room for local rice prices to further alleviate,” Dakani said.
Rice inflation has been on a downward trend after the government has taken several measures to tame the retail price of staple foods over the past few months. These include lower tariffs on rice imports last July and the food security emergency announced in February.
“This further dissolution mainly comes from the decline in rice CPI we have noticed. Global oil prices could also lead to greater inflation,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of Philippines.
Mr. Dhakani also pointed to a “substantial rollback” in fuel prices that month.
He added: “Not only has the global oil price been lowered, but the peso has also strengthened the U.S. dollar against the dollar, making fuel and diesel more affordable.”
In April, the net price adjustment for kerosene fell by p0.80 p0.80. For gasoline and diesel, it's net increase to P0.40 liters.
The peso was P55.84 per dollar on April 30, with the strongest results of P55.69 over seven months or since September 20, 2024.
Emilio S. Neri, chief economist at the Bank of the Philippines Islands. “The decline in major foods, especially rice, vegetables and fish, especially rice, vegetables and fish, and softer oil and LPG rates continue to drive disinfection,” said the report.
Citi research also marks downside risks to inflation outlook, such as the expected impact of weak global demand.
But higher power rates and light rail transport (LRT) Title 1 fare may also drive inflation in April, analysts said.
“However, the upside potential may come from higher demand for electricity, which may partially offset the April CPI UPTICK,” Mr Asuncion said.
Meralco raised the total ratio in April to P0.7226 per kilowatt-hour to P12.2901 per kilowatt-hour in March.
“This combined with a sharp rise in electricity bills and a rate hike in P5-P10 LRT fare will affect about five million commuters in the national capital area every day offset Price drop pressure. ” said Neri.
Starting April 2, the boarding fare for LRT-1 increased from P13.29 to P16.25, while the fare per kilometer ranged from P1.21 to P1.47.
Mr Dacanay added: “Although electricity prices may have risen since March, we believe the increased prices are not enough to offset the downward price pressure on transportation and food costs.”
Relaxation space
Mr Yasen said they expect inflation to be 2.2%.
“Our estimated inflation trajectory for 2025-2026 is well beyond the BSP's inflation target range by 2-4%. The peak forecast inflation rate is 2.9%,” he said.
As inflation is expected to be within the target range, BSP will be able to continue its reduction rate.
“In view of the current inflation outlook, it seems reasonable that BSP's possibility of lowering another interest rate at the June policy meeting,” Neri said.
Oikonomia Advisory & Research, Inc. Economist Reinielle Matt Erece said that if inflation continues to be suppressed and dragged on demand, it could prompt people to need to make money to boost economic activity.
“As long as inflation remains the case, we think the board will continue to be more open to additional tax cuts,” said Miguel Chanco, chief emerging Asian economist at Pantheon Macroeconomics.
In 2025, BSP adjusted inflation forecast is 2.3%, 3.3% in 2026 and 3.2% in 2027.
“If inflation continues to run below or near the lower end of the BSP target, we think this could be another policy rate that will be lowered from the BSP at the next meeting in June,” Chinabank Research said.
Mr Neri also pointed out that stable oil prices and peso holdings of $56 per dollar will also help reduce the case.
The Monetary Commission cut 25 base (BP) reductions last month, which restored it to a slow cycle after the suspension of fees in February.
Meanwhile, analysts said the central bank will be able to consider the first-quarter GDP data in its decision at its next policy meeting.
Mr Chanco said the first quarter growth that exceeded expectations would “almost guarantee further relief in June”.
“I hope BSPs are focused on inflation and the first quarter GDP prints of June meetings. If the growth in the first quarter is still weak, then they will definitely reduce.”
PSA will release its first-quarter GDP data on May 8.
“In addition, if GDP growth figures that expire later this month show a disappointing performance, the argument for lowering tax rates in June will be more attractive,” Mr Neri added.
Citi Research expects the Monetary Commission to cut $2.5 billion at each meeting in August and December.
It said it also saw “given external headwinds, the risks of the latter two cuts were brought to June and October, respectively.”
It added: “However, we found that if growth is more resilient to headwinds than expected, the cumulative 50 bp cut we expected may not be able to achieve.”
