The April inflation outturn of 6.6 percent is within forecast range of 6.3 to 7.1 percent, consistent with the overall assessment that inflation will remain elevated over the near term before gradually decelerating back to target range towards end-2023, the Bangko Sentral ng Pilipinas said on Friday.
According to the BSP, the balance of risks to the inflation outlook for this year and next also remains tilted heavily towards the upside.
“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. On the downside, the impact of a weaker-than-expected global economic recovery continues to be the primary factor that could dampen inflation,” it said.
The poly-making monetary board said it will consider the April inflation outturn and the upcoming GDP release for Q1 2023 in its meeting on monetary policy on 18 May as 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.
Analysts have said the deceleration in food prices has extended space for the BSP to pause the series of policy rate hikes it adopted to bring inflation back to the target range of 2 percent to 4 percent.
The BSP also said it continues to support the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation.
