(April 30): The Philippine central bank forecasts that April inflation rate could surge to between 5.6% and 6.4%, breaching its target range, amid conflict in the Middle East.
Inflation risks have intensified due to “significantly higher domestic petroleum prices, rising costs of key food items such as rice, fish, and meat, increased electricity charges, and the peso depreciation,” the Bangko Sentral ng Pilipinas (BSP) said in a statement on Thursday.
The high end of the range would place the inflation at the fastest pace since the 6.6% recorded in April 2023, according to data compiled by Bloomberg. The forecast, which is faster than the 4.1% in March, is also well above the central bank’s 2%-4% target range.
The peso recouped some of its losses on Thursday after hitting a record low of 61.750 against the dollar earlier in the day.
The BSP said the anticipated decline in vegetable and fruit prices may help temper inflation, “but sources of upside price pressures continue to warrant close monitoring”.
The Philippines imports nearly all of its oil needs from the Middle East. Transportation inflation already hit 9.9% in March, the fastest pace since January 2023, with gasoline and diesel prices recording their largest gains since September 2022.
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The Philippine central bank raised its benchmark interest rate last week for the first time in more than two years in response to the inflation surge.
“The BSP will remain vigilant and guided by incoming data, specifically on inflation and growth prospects,” BSP said on Thursday, adding that it will continue to monitor developments in the Middle East.
The government is set to release April inflation data on May 5.
This story was produced with the assistance of Bloomberg Automation.
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