THE BANGKO SENTRAL ng Pilipinas (BSP) expects inflation to have picked up further in April to hit a new peak, with price movements driven by rising oil and power rates.
The BSP’s Department of Economic Research gave a 3.9-4.7% forecast range for headline inflation last month. This is “slightly” higher than the 3.8-4.6% estimate given for March, which clocked in at 4.3% using 2012 prices, with the higher end of April’s forecast range again well beyond the government’s 2-4% target.
The BSP’s forecast range also includes the 4.5% median estimate from a BusinessWorld poll among economists, which if realized will be higher than the 4.3% actual rate in March and 3.2% in April 2017.
The Philippine Statistics Authority will report the latest inflation data on Friday.
“Geopolitical tensions in the Middle East caused a sharp increase in international oil prices spilling over to higher domestic petroleum prices for the month,” the central bank said in a statement yesterday.
“In addition, higher electricity rates in Meralco-serviced areas as well as higher rice prices due to supply conditions could contribute to additional price pressures.”
World crude prices hit three-year highs in April amid renewed tensions in the oil-rich Middle East, which pushed up retail pump prices here. Year-to-date, gasoline prices have increased by P3.45 per liter while diesel costs are up by P4.55 per liter, according to the Department of Energy.
Rice prices also maintained their ascent for the third straight month due to short supply, according to the National Food Authority.
Power distributor Manila Electric Co. likewise announced a 22.5-centavo increase per kilowatt-hour for April’s utility bills due to a higher generation charge.
Headline inflation averaged 3.8% as of end-March, just a tad below the 3.9% expected by the BSP for the full year and close to breaching the 2-4% target band.
Analysts expect price increases to accelerate further this month, as the impact of a weaker exchange rate and higher taxes add to upward pressures. Several economists are even pricing in a rate hike from the BSP Monetary Board’s May 10 policy review, saying that such a move will keep borrowing rates competitive at a time of faster inflation.
“The BSP will continue to monitor closely evolving inflation dynamics over the policy horizon against any signs of incipient price pressures that may warrant a policy response,” the central bank said on Monday.
BSP Governor Nestor A. Espenilla, Jr. has said the monetary authority is prepared to “take immediate and appropriate measures” should inflation cover more goods, as he finds comfort in knowing that the local economy can weather the impact of higher interest rates if needed.
Some analysts have pointed out that Mr. Espenilla has taken a more hawkish tone recently compared to his previous remarks, while others say that robust domestic economic activity and upbeat first-quarter growth prospects could allow the BSP to stay on hold for now. — Melissa Luz T. Lopez

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