April inflation remains unchanged at 4.4%

By Lawrence Agcaoili (The Philippine Star) Updated May 06, 2010 12:00 AM

MANILA, Philippines - Inflation was steady at 4.4 percent in April as the growth rates in food, beverage, and tobacco (FBT) as well as housing and repairs (H&R) were unchanged, the National Statistics Office (NSO) reported yesterday.

Data released by the NSO showed that April inflation was unchanged from the 4.4 percent rate in March but was lower than the 4.8 percent registered in the same period last year.

Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said the April figure was well within the central bank inflation forecast range of between 3.9 percent and 4.8 percent.

“April inflation remained unchanged as the heavily-weighted food items registered the same inflation rate and as non-food inflation was only marginally higher relative to the previous month’s reading,” Tetangco said.

NSO data showed that annual inflation for FBT remained at its last month’s rate of 3.1 percent while the H&R index was also unchanged at 1.7 percent. FBT and H&R together account for about 68 percent of the consumer price basket. The annual inflation for food alone was also unchanged at 3.1 percent in April.

The NSO said the annual rate of price increase in the clothing index decelerated to two percent in April from 2.1 percent in March followed by services to 5.8 percent from 6.8 percent, and miscellaneous items to 1.4 percent from 1.5 percent. For the first four months of this year, inflation averaged at 4.3 percent from 6.4 percent in the same period last year.

Tetangco pointed out that the price movements bode well for the full-year inflation forecast and support the view the current stances of policy remains appropriate.

Monetary authorities expect inflation to hit a high of six percent either in June or July due to a possible wage increase, fare hike, and rising pump prices of petroleum products.

During their latest meeting last April 22, the BSP raised its inflation forecast to 5.1 percent instead of 4.64 percent this year and 3.7 percent instead of 3.45 percent next year assuming that there would be a wage increase and fare hike in May and at the same time the rising trend in oil prices would continue.

Despite the upward adjustment, inflation forecast would still fall within the BSP target of 3.5 percent to 5.5 percent this year and three percent to five percent next year.

“The latest assessment continues to show within-target inflation for both 2010 and 2011, even as inflation is expected to pick up slightly over the next few months, in part due to base effects from the low readings last year and higher crude oil prices,” the BSP chief stressed.

Earlier, Tetangco said the BSP would likely keep its key policy rates at record lows in the first half of the year on the back of benign inflation outlook. It has kept its overnight borrowing rate at a record low of four percent and its overnight lending rate at six percent for seven consecutive policy-setting meetings since July last year.

The BSP slashed its key policy rates by 200 basis points between December of 2008 and July of 2009 and at the same time introduced several liquidity enhancing measures to cushion the impact of the global economic meltdown.