Latest data from the Philippine Statistics Authority (PSA) indicate a slowdown of 2.2 percent in April inflation from the 2.5 percent rate last March. This is the lowest rate since November 2019.
The slip in the country’s headline inflation has been attributed to the lower demand on oil since almost all countries have cut transportation amid the CoVID-19 pandemic.
Meanwhile, lower transport cost helped offset the increase of food index at 3.4 percent brought about by the price increase in fruits, vegetables, and other food products such as ginger and calamansi despite ongoing price caps on essential goods. Price increase on meat and fish have also slowed down.
The Bangko Sentral ng Pilipinas (BSP) said the 2.2 percent rate “was within the BSP’s forecast range of 1.9 -2.7 percent.”
“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,” the BSP statement read.
ING Bank Senior Economist Nicolas Mapa sees inflation to be moderate after the end of the lockdown and “also foresee a steady acceleration in price pressures in the second half of the year as supply side pressures outweigh the demand side pull.”
The BSP sees opportunity on the slowdown of inflation to reduce interest rates in banks and make borrowing affordable.
The central bank has imposed 125 basis points rate cut this year. It also expects the economy to recover in a U-shape recovery path in 2021, assuming the pandemic has been contained by the second half of 2020 with the help of the government’s recovery plan.
