Headline inflation slowed down further to 3.0% last month which is the lowest inflation print since January last year. Market consensus was at 3.1% with UnionBank’s Economic Research Unit (ERU) expecting April inflation at 3.1% as well.

The slowdown was mainly observed from slower annual increase in the heavily-weighted food and non-alcoholic beverages index at 3.0%. Slower annual upticks were also noted in much of the indices in the inflation basket.
 

The last month’s print brings the annual headline average to 3.6%, which ERU thinks is “not well-entrenched” yet within the government’s target of 2.0-4.0%.

Upside price pressures, such as the continued increase in global oil prices and the probable prolonged impact of the El Nino, may keep the BSP from cutting interest rates. However, a reserve requirement ratio cut may be coming this Thursday at the Monetary Board meeting.

Article by Ruben Carlo Asuncion

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