Inflation likely picks up in April as food prices rise

MANILA, Philippines - Inflation is expected to have picked up pace in April from the previous month on the back of higher food prices, two banks said in separate research notes.

UK-based Barclays and Metropolitan Bank & Trust Co. both said inflation likely accelerated to 4.1 percent in April from 3.9 percent in March.

“Inflation (is) likely to tick higher as food prices rise at the margin, along with a sticky core,” Barclays said in its  latest Emerging Markets Weekly report.

Inflation peaked at a two-year high of 4.2 percent in January before easing to 4.1 percent in February and 3.9 percent in March.

The Bangko Sentral ng Pilipinas last week forecast April inflation to settle within 3.6 percent to 4.5 percent amid higher rice prices and upward adjustments in power rates.

“Rice prices continue to move up this year, as supply constraints from low production and efforts to curb smuggling ensued,” Mabellene Reynaldo, research analyst at Metrobank, said in its Weekly Views from the Metro report.

She noted regularly-milled rice prices have already gone up 19.2 percent from year-ago levels, while total rice stocks as of March 1 fell 10.9 percent from the previous month to 1.78 million metric tons.

Moreover, the government will be importing 800,000 MT of rice from Vietnam to augment supply for the lean season in the third quarter.

At the same time, Reynaldo said “higher energy costs are also expected to drive the index, as oil prices increased from sanctions on Russia and signs of US recovery.”

“Electricity costs also moved higher from increased demand during the summer season,” she added.

But lower increases in other food prices should keep full-year inflation within the BSP’s three percent to five percent target, Reynaldo said.

The BSP has forecast inflation to average 4.2 percent this year, at the midpoint of its target range.

Monetary authorities in their last policy meeting on March 27 have stressed inflation expectations remain within target even with the upside risks of higher food prices, pending power rate hikes, and volatile oil prices.