By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said April’s 4.5 percent inflation turnout — while on the high side of its forecast — has a seasonally adjusted month-on-month deceleration which they would factor in when they meet on Thursday, May 10, to decide on policy rates.
“These are relevant factors to consider at the policy review next week in determining the necessity and shape of a measured response to halt potential build up in inflationary expectations,” said Espenilla.
The latest consumer price index (CPI) level is higher than 4.3 percent in March, and on the high side of the BSP forecasts range of 3.9 percent to 4.7 percent for the month.
Global oil prices went up during the period due to geopolitical tensions in the Middle East which resulted to a sharp increase in international oil prices and affected prices of petroleum in the country. The higher electricity rates and rice prices also contributed to the increase in inflation rate.
Espenilla reiterated that price pressures are still on the temporary side. “Such expectations seem to be feeding off essentially cost-push price pressures that may be transitory in nature,” he said.
The elevated CPI has consumers worried as the year progresses, despite pronouncements from the BSP that inflation will eventually go back to within the government target of two percent to four percent.
In a statement, the consumer advocacy group Laban Konsyumer, Inc. (LKI), said the “runaway inflation” of 4.5 percent in April and the 5.3 percent first quarter inflation has “caused more miseries to the 30 percent of the household or the poor consumers.”
According to LKI President Victorio Mario Dimagiba, the government should act now and take measures to slow down inflation. He again called on the government to stop the implementation of TRAIN phase one, which the BSP said has affected CPI level, albeit temporary.
The consumer group has asked for relief from the Supreme Court on a temporary restraining order versus the excise taxes on the socially sensitive products like diesel, LPG, kerosene, bunker fuel and coal.
The BSP’s Monetary Board will meet on May 10 for its third policy meeting for this year. During its previous policy meeting on March 22, the central bank announced an average inflation forecast of 3.9 percent for 2018 and three percent in 2019.
Espenilla said they are reviewing a measured policy response to ensure that the 2019 inflation target is not at risk.
While external factors such as geopolitical tensions affecting global oil prices are key upside risks to inflation, most analysts also point to the TRAIN law because of second-round effects. The increase in electricity rates and a weaker peso are also upside risks to inflation.