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April Inflation at 4.5 Percent

05.05.2011

The year-on-year headline inflation increased to 4.5 percent in April from the March level of 4.3 percent, and was within the BSP’s forecast for the month of 3.7-4.7 percent. The resulting year-to-date average of 4.2 percent remained within the Government’s target range of 3-5 percent for 2011.  Core inflation, which excludes certain food and energy items to measure generalized price pressures, was also higher in April at 3.8 percent compared with 3.5 percent (revised) in March. Likewise, month-on-month headline inflation went up to 0.8 percent from 0.3 percent in the previous month. 

Higher inflation in April was traced mainly to the increase in inflation for transportation and communication services and fuel as prices of petroleum products continued to increase during the month.  Meat inflation also went up in April, possibly reflecting post-Lent demand.  Likewise, electricity rates went up due to higher transacted prices at the Wholesale Electricity Spot Market (WESM) in April.  Meanwhile, inflation for fruits and vegetables went down and tempered headline inflation in April as supply amply met market requirements.  

Governor Amando M. Tetangco, Jr. noted that the latest inflation reading continues to reflect supply-side pressures emanating from high global oil prices.  He added that some early signs of second-round effects are beginning to be more evident.  Governor Tetangco stressed that the Monetary Board will remain vigilant in monitoring inflation risks over the policy horizon, and will calibrate policy settings to address them if necessary, to safeguard the BSP’s price stability objective.

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