Inflation likely hit 1.3-2.1% in April

INFLATION could have fallen even further below the 2.0- to 4.0-percent target in April due to lower food prices and a stronger peso, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

The central bank said consumer price growth, which eased to 1.8 percent in March from 2.1 percent in February, could have ranged from 1.3 percent to 2.1 percent last month.

"Easing prices of rice, fish, fruits and vegetables, favorable domestic supply conditions along with lower oil prices and the peso appreciation contributed to the downward price pressures for the month," it said in a statement.

"These could be offset in part by the higher electricity rates and LRT 1 fares," it added.

The result could support further interest rate cuts by the BSP's policymaking Monetary Board, which resumed easing last April 10 by ordering a 25-basis-point (bps) rate cut after an unexpected pause in February.

The BSP's benchmark rate now stands at 5.5 percent following the February cut and reductions totaling 75 bps last year.

"Going forward, the Monetary Board will continue to take a measured approach in adjusting the monetary policy stance in line with its price stability objectives conducive to balanced and sustainable growth of the economy and employment," the central bank said.

BSP Governor Eli Remolona Jr. has indicated further "baby steps" will be made with regard to interest rate cuts but also said that monetary authorities were in no rush to do so.

Many analysts, however, expect another 25 bps reduction to be announced after the next policy meeting on June 19 with inflation well under control and given the need to prop up economic growth.

The economy grew by 5.7 percent last year, missing the 6.0- to 6.5-percent goal. It marked a second straight year of below-target growth that could extend to 2025 based on downward forecast revisions made by multilateral organizations such as the International Monetary Fund.

The government is aiming for 6.0- to 8.0-percent growth this year and officials have said that the upper end is likely out of reach given global headwinds. They remain optimistic, however, that 6.0 percent will be achieved.

Preliminary first-quarter gross domestic product growth data will be released next Thursday.