By Chino Leyco
The country’s annual inflation eased to a five-month low in April, its lowest level since November last year, reflecting the drop in global oil prices and weaker economic activity due to the coronavirus outbreak, data from the Philippine Statistics Authority (PSA) showed on Tuesday.
Based on PSA report, the country’s headline inflation settled at 2.2 percent in April, down from 2.5 percent in March and 3.0 percent in the same month last year.
Core inflation, which excludes volatile food and fuel prices, was 2.8 percent, slowing from March’s 3.0 percent.
Last month’s print brought the average inflation rate in the four months to April to 2.6%, well inside the central bank’s 2%-4% target this year.
Economists said the easing trend in inflation will provide the central bank greater room to cut interest rates and reduce banks’ reserve requirement ratio to support growth.
“Contributing to the downtrend in the headline inflation in April 2020 was the further decrease in the annual rate of transport index at 6.1 percent. This was the lowest inflation recorded in this group’s index since October, 2015,” PSA said.
In addition, slower annual mark-ups were seen in the indices of the following commodity groups:
1. Alcoholic beverages and tobacco, 17.9 percent;
2. Clothing and footwear, 2.6 percent;
3. Housing, water, electricity, gas, and other fuels, 0.3 percent;
4. Health, 2.8 percent;
5. Communication, 0.3 percent; and
6. Restaurant and miscellaneous goods and services, 2.4 percent.
Meanwhile, the index of the heavily-weighted food and non-alcoholic beverages posted a higher annual increment of 3.4 percent during the month.
In January to April, the avenge inflation was at 2.6 percent, well within the government’s target of 2.0 percent to 4.0 percent.
The Philippines was among the first regional nations to take drastic measures against the virus by ordering a quarantine for half of the population of more than 107 million. Growth is forecast to contract for the first time in more than two decades this year, the central bank has said.
The Philippines will announce first quarter gross domestic product data on Tuesday.
The central bank has cut interest rates thrice this year, with the latest one an off-cycle move in April that brought the benchmark interest rate to a record low of 2.75 percent.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno hinted on Monday he was in no rush to slash policy rates again, saying it would be prudent on the part of policymakers to wait for the series of policy easing to work their way through the economy. (With Reuters)