The Bangko Sentral ng Pilipinas (BSP) said the inflation rate for the month of April likely settled at a low of 3.5 percent or a high of 4.3 percent versus March’s 3.7 percent, amid elevated gasoline prices and a depreciating peso vis-à-vis the US dollar.
 

Inflation is the increase in the prices of goods and services in an economy over a particular period. This is usually measured using the consumer price index (CPI).
The BSP on Tuesday, April 30, said the April inflation projection is anchored on the “continued price increases for rice and meat along with higher gasoline prices” as well as the exchange rate market where the peso has been depreciating past P57.
 

These are “the primary sources of upward price pressures” for the month of April, said the BSP.
 

What could keep the CPI below four percent or at least the same or lower than March’s 3.7 percent rate is the lower prices of some food items and reduced power rates.
“Meanwhile, lower prices of fish, fruits, vegetables as well as lower electricity rates and the rollback in LPG prices could offset the upside price pressures,” noted the BSP.
The government will announce the April CPI on May 7.
 

The BSP said it “will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making.”
 

For the first quarter, the inflation rate averaged at 3.3 percent which was within the government forecast range of two percent to four percent.

The BSP had expected this inflation outturn in the first quarter which was due largely to negative base effects. However, the BSP said inflation could temporarily accelerate above the target range in the next two quarters of the year because of the El Nino weather conditions and its impact on domestic agricultural output and positive base effects.
 

The central bank also noted that other upside risks to the inflation outlook are higher transport charges; higher prices of food commodities due to supply constraints; increased electricity rates; higher global oil prices; and implementation of a legislated increase in the minimum wage.
 

During BSP’s last monetary policy meeting on April 8, it decided to keep the target reverse repurchase (RRP) rate unchanged at 6.5 percent because price pressures remained on the upside. The market expects the BSP will have a hold stance until the last quarter of 2024.
 

As of April 8, the BSP has a risk-adjusted inflation forecast for 2024 of four percent versus the previous estimate of 3.9 percent, but maintained the 3.5 percent projection for 2025.
 

The Monetary Board, BSP’s policy-making arm, has also retained the interest rates on the overnight deposit at six percent and lending facilities at seven percent.