Inflation falls to 16-month low 3%
April slowdown attributed to cheaper rice, slower increase in non-alcoholic beverages
The rate of increase in consumer prices continued to ease in April this year as cheaper rice starts to flood the
domestic market following the Duterte administration’s decision to relax the government’s restrictive policy on the importation of Filipinos’ staple food.
Based on the Philippine Statistics Authority’s (PSA) report
Tuesday, headline inflation clocked in at 3.0 percent in April, slower than the previous month’s 3.3 percent and 4.5 percent in the same month last year. The latest reading was also slightly lower than the median market forecast of 3.1 percent.
The April inflation rate, which is a 16-month low and marked its sixth month decline, was also within the Bangko Sentral ng Pilipinas’ (BSP) projection of 2.7 percent to 3.5 percent.
According to PSA, the continued slowdown was mainly brought about by the slower annual increase in index heavyweight food and non-alcoholic beverages at 3.0 percent from 3.4 percent in March.
In particular, the average price of rice was almost unchanged last month, registering an inflation rate of 0.02 percent, a nosedrive from 1.4 percent in the previous month.
Beginning this year, the government implemented the law on rice tariffication, which converted quota restrictions into tariffs.
Based on the BSP’s estimates, the rice tariffication law would result in at least 0.6-percentage point reduction in inflation this year and another 0.3 to 0.4-percentage point next year.
“The recent inflation reading validates our efforts towards stabilizing inflation so that the country’s buoyant economic growth, along with key reforms, remains unimpeded,” said Secretary of Socioeconomic Planning Ernesto M. Pernia.
The April inflation number brought down the year-to-date average to 3.6 percent, which is within BSP’s inflation target for 2019 of 2.0 percent to 4.0 percent.
Notably, food inflation slowed to 3.0 percent in April as price adjustments in key food items such as rice, meat, and fish further slackened.
Reflecting the trend of overall price increases, inflation in the National Capital Region slowed for the eighth consecutive month to 3.1 percent last month.
“The continued low inflation of rice can be attributed to the stable rice supply in the country, with more imported rice expected to arrive in the country as the Rice Liberalization Act takes effect,” Pernia said.
The law, which lifts the quantitative import restriction on rice, is expected to keep rice prices low and more affordable especially for low-income households, the head of the National Economic and Development Authority (NEDA) said.
But Pernia said that the government should remain watchful of upside risks to inflation such as the ongoing El Niño phenomenon, possible increase in utility rates, and volatility in international oil prices.
“Given unstable global oil prices, the government should prioritize rolling out the second tranche of its social mitigating measures under the TRAIN law, such as the unconditional cash transfer and Pantawid Pasada, especially now that the 2019 national budget has already been signed into law,” he added.