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Philippines Inflation April 2022

Philippines: Inflation rises in April to highest level since December 2018

Consumer prices recorded 0.98% growth over the previous month in April, which was virtually unchanged from February’s 0.99% increase. Price pressures rose for service goods such as education and hospitality, likely due in part to the recent reopening of the economy. Meanwhile, price pressures eased for food and utilities slowed.

Inflation rose to 4.9% in April from March’s 4.0%. April’s reading represented the highest inflation rate since December 2018. Meanwhile, the trend was unchanged, with annual average inflation coming in at March’s 3.9% in April.

Official core inflation figures were not published due to the recent rebasing of the consumer price index. Nomura, one of our panelists, estimate that core inflation rose to 2.3% in April from 2.2% in March.

High commodity prices continued to fan inflation in April. Given that core inflation remained comfortably within the Central Bank’s 2.0–4.0% target range, this suggests that rising inflation is largely being caused by external shocks to supply rather than by developments in the domestic economy. With the labor market still retaining slack, the potential for a wage-price spiral is remote.

Analysts at the EIU said:

“With much of the inflationary pressure coming from the supply side, EIU expects the government to roll out price control measures or subsidies on fuels in the near future, as it has done on certain food items in recent years. These should prove partially effective in slowing inflation in the second half of 2022, although at the expense of keeping the budget deficit wide this year. The central bank is likely to remain cautious regarding its pace of tightening out of concerns for the economy. Monetary policy also tends to work less well in containing inflation driven by supply-side issues.”

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