Inflation rate slowed down to 6.6% in April, says PSA

Inflation rate continued its downtrend for the third straight month as it further cooled down in April amid the slowdown in food, transport, and utility costs during the period, the Philippine Statistics Authority (PSA) reported on Friday.

At a virtual press conference, National Statistician and PSA chief Claire Dennis Mapa reported that inflation — the rate of increase in the prices of goods and services — eased to 6.6% last month from 7.6% in March, bringing the year-to-date rate to 7.9%.

This is the third time that inflation decelerated from a peak of 8.7% in January.

Year-on-year, however, the inflation print in April was still faster than the 4.9% rate seen in April 2022.

Last month’s inflation rate falls within the Bangko Sentral ng Pilipinas’ forecast range of 6.3% to 7.1%.

“Ang pangunahing dahilan ng pagbagal ng antas ng inflation nitong Abril 2023 kaysa noong Marso 2023 ay ang mas mabagal na paggalaw ng presyo ng Food and Non-Alcoholic Beverages,” Mapa said.

(The main reason for the slowdown of inflation in April 2023 versus March 2023 was the slower movements in the prices of Food and Non-Alcoholic Beverages.)

The commodity group recorded an inflation rate of 7.9%, down from 9.3% month-on-month.

The second top contributor to the slowdown in overall inflation was Transport with a rate of 2.6% from 5.3% in March.

This was followed by Housing, Water, Electricity, Gas and Other Fuels which saw an inflation rate of 6.5%, down from 7.6% in the prior month.

Food inflation, likewise, eased to 8% in April from 9.5% in March as prices of vegetables, tubers, plantains, cooking bananas and pulses saw a decline to 10% from 20%.

Fish and other seafood also contributed to the downtrend in food inflation, with a rate of 7% from 9.9% month-on-month.

Meat and other parts of slaughtered land animals also played a part in the downward trend recording a 4.2% inflation during the month from 4.6% in the previous month.

Food inflation

In a statement, Finance Secretary Benjamin Diokno said the downward trend in the inflation rate was supported by the moderation in food inflation which showed price declines in some vegetables and sugar as supply improved. 

"This is positive news. The recent inflation numbers indicate that we are on track to managing inflation to within target sometime in the fourth quarter, if not sooner, and near the midpoint of the target range of 2.0% to 4.0%  by next year," Diokno said.

"The consistent decline in inflation rate over the past three months clearly demonstrates that the whole-of-government approach to tackling inflationary pressures is bearing fruit," the Finance chief said.

Likewise, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said that "the NEDA is optimistic that the downward trend will continue and settle further within the government’s outlook."

Last month, the Development Budget Coordination Committee (DBCC) revised its 2023 inflation outlook to 5% to 7% percent from the previous assumption of 2.5% to 4.5%, in view of persisting high prices of food, energy, and transport costs.

Balisacan, nevertheless, said the government acknowledges risks to inflation outlook to remain tilted toward the upside amid potential transport fare increases, wage adjustments, and domestic food supply pressures amidst the threat of El Niño and the resurgence of African Swine Flu. 

El Niño threat

Mapa said that it is uncertain whether the downtrend will continue "given the current weather situation."

"There is El Niño [threat] which will have an effect on food commodities. We are tracking this on the production side. There are threats, particularly caused by El Niño and its possible impact on the food basket," the PSA chief said.

On Tuesday, state weather bureau PAGASA issued an El Niño alert after forecasts showed that the phenomenon may emerge in the next three months at 80% probability and may last until the first quarter of next year. 

The El Niño phenomenon is characterized by the abnormal warming of sea surface temperatures in the central and eastern equatorial Pacific Ocean and below-normal rainfall.

The BSP also said that despite the recent slowdown in food inflation, "the potential effect of ongoing supply shortages continues to pose an upside risk to the outlook."

"Other upside risks emanate from the impact of higher transport fares, increasing electricity rates, as well as above-average wage adjustments in 2023. On the downside, the impact of a weaker-than-expected global economic recovery continues to be the primary factor that could dampen inflation," the central bank said.—KBK/ VAL, GMA Integrated News