MANILA – The rate of price increases in the country decelerated to 6.6 percent for the third consecutive month in April from 7.6 percent in March but the Bangko Sentral ng Pilipinas (BSP) said the balance of risks "remains tilted heavily towards the upside" due partly to supply-side factors.
In a statement on Friday, the central bank noted that the inflation print in April is within its 6.3 percent to 7.1 percent forecast for the month and is "consistent with the overall assessment that inflation will remain elevated over the near term before gradually decelerating back to target range towards end-2023."
"Despite the recent slowdown in food inflation, the potential effect of ongoing supply shortages continues to pose an upside risk to the outlook. Other upside risks emanate from the impact of higher transport fares, increasing electricity rates, as well as above-average wage adjustments in 2023," it said.
Average inflation to date stood at 7.9 percent, way above the government’s 2 percent to 4 percent target band.
Core inflation, which excludes volatile oil and food items, slowed to 7.9 percent from 8 percent in March.
The BSP said downside risks to inflation, on the other hand, include the effects of weaker-than-expected global economic recovery, which, it pointed out "continues to be the primary factor that could dampen inflation."
It also said the latest inflation developments and the upcoming report of the domestic economy’s first-quarter performance would be among what the policy-making Monetary Board (MB) will assess vis-a-vis the central bank’s policy stance and policy decision during its rate-setting meeting on May 18.
The BSP said it "remains committed to adjusting the monetary policy stance as necessary to prevent the further broadening of price pressures, as well as the emergence of additional second-order effects."
"The BSP also continues to support the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation," it added. (PNA)
