April inflation likely below 2%

Economists and financial market analysts expect inflation in April to have remained below 2 percent due to cheaper rice and fuel, as well as the appreciation of the peso.

HSBC economist for Southeast Asia Aris Dacanay said inflation last month likely crawled to 1.9 percent from the 1.8 percent in March recorded by the Philippine Statistics Authority.

“Electricity prices may have increased from March, although we don’t think the increase was substantial enough to offset the downside price pressures from transport and food costs,” he said.

The Manila Electric Company (Meralco) raised its prices for typical households to P13.0127 per kWh in April from P12.2901 per kWh in March due to higher power generation costs. This translated to an additional P145 in electricity bills for households consuming 200 kWh.

However, Dacanay said lower fuel prices in the middle of the month likely tempered overall inflation.

Oil companies cut prices of gasoline by P3.60 per liter, diesel by P2.90, and kerosene by P3.30 last April 15 as global oil prices declined.

“The peso also strengthened against the US dollar, making fuel and diesel more affordable,” Dacanay said.

Rizal Commercial Banking Corporation chief economist Michael Ricafort shared that the peso hit its strongest at P56/$1 last month after nearly seven months.

Cheap tomatoes

Meanwhile, global crude prices dropped to $62 per barrel — among three-year lows, the economist said. Rice prices also continued to fall, alongside global prices, Dacanay said.

However, he said the decline in retail prices at domestic markets has been slower.

National statistics showed rice prices already decelerated faster by 7.7 percent in March from 4.9 percent in February amid the implementation of a lower tariff on imported rice at 15 percent from 35 percent.

However, given cheaper prices of other food items, Ricafort said overall inflation likely slowed to 1.6 percent.

“For instance, the price of local tomatoes declined dramatically since February amid a supply glut in some areas in Northern Philippines, thereby [they] could have helped ease inflationary pressures on some vegetables,” he said.

Ricafort added the government requested retailers to cap prices of pork liempo at P380 per kilo and pork kasim and pigue at P380 per kilo starting 10 March.

Agriculture Secretary Francisco Tiu Laurel Jr. said this measure should keep pig growers profitable while the government strives to prevent a supply shortage by distributing more vaccines and imposing hygiene measures against African swine fever.