Slower inflation in April gives Philippine central bank room to ease policy
Vendors and customers wearing face masks for protection against the coronavirus disease (COVID-19) are seen inside a public market in Quezon City, Metro Manila, Philippines, February 5, 2021. REUTERS/Eloisa Lopez
MANILA :Philippine inflation was at its lowest level in more than five years in April due to falling food and transport costs, the statistics agency said on Tuesday, giving the central bank room to ease policy to support growth.
Annual inflation slowed to 1.4 per cent in April, down from 1.8 per cent in March and at its lowest since November 2019. This brought the year-to-date average inflation to 2.0 per cent, matching the low end of the central bank's 2.0 per cent to 4.0 per cent target for the year.
"The more manageable inflation outlook and the downside risks to growth allow for a shift toward a more accommodative monetary policy stance," the central bank said in a statement.
The central bank resumed its easing cycle last month, cutting its key policy rate by 25 basis points to 5.5 per cent. It signalled more reductions to come in "baby steps" to help the economy cope with global challenges.
The Philippines is scheduled to release its first-quarter GDP figures on May 8, ahead of the central bank’s next policy meeting on June 19.
Last month's slower print was attributed to a 10.9 per cent year-on-year drop in rice prices, sharper than March's 7.7 per cent fall, and a 2.1 per cent decrease in transport costs, compared to a 1.1 per cent decline in the previous month.
Core inflation, which excludes volatile items such as food and energy, remained steady at 2.2 per cent, unchanged from March.
