(Bloomberg) — Inflation in the Philippines accelerated for a third straight month in April, and continued pressure on food supplies could keep prices under pressure and prompt the central bank to keep its benchmark rate at the highest level in 17 years.
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Consumer prices rose 3.8% from a year ago last month, according to government data released Tuesday. That was slower than the 4.1% average gain estimated by economists in a Bloomberg survey. Rice inflation slowed for the first time in six months, reaching 23.9%, compared to 24.4% in March.
The latest impression is in line with the Bangko Sentral ng Pilipinas’ “expectations that inflation may temporarily accelerate above the target in the next two quarters of the year” due to the impact of adverse weather conditions on the country’s agricultural production, the center said. bank said in a statement.
Still, the BSP said it expects average inflation to return to its 2%-4% target for this year and next. April’s number was within the central bank’s forecast range of 3.5% to 4.3%.
BSP Governor Eli Remolona last month flagged a growing risk of inflation breaching the central bank’s target for a third consecutive year in 2024. Persistent pressures on prices are building an argument for the central bank to maintain its rate base interest rate at 6.5% at a meeting next week and postpone a pivot to monetary easing, possibly until next year.
Read more: Philippines rate cut more likely in 2025 due to inflation risks
The shift from El Niño to La Niña could worsen pressure on the Philippines’ food supply, said Economic Planning Secretary Arsenio Balisacan. “We are taking comprehensive steps to ensure food security amid geopolitical concerns and weather patterns worsened by climate change,” he said in a statement.
La Niña tends to bring more rain to parts of Asia and generally follows the dry weather phenomenon El Niño.
“Our actions aim to boost local production and prepare for any challenges in food supply and price increases,” Balisacan added.
The central bank said it will consider the latest inflation figures as well as first-quarter gross domestic product data – which will be released on Thursday – at its next monetary policy meeting on May 16.
Slower-than-expected inflation “would bode well and further support the view of stable local policy rates” at next week’s meeting, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.
–With assistance from Manolo Serapio Jr., Cliff Venzon and Tomoko Sato.
(Updates with details throughout.)
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