INFLATION RATE UNCHANGED AT 4.5 PERCENT

Headline inflation was unchanged at 4.5 percent year-on-year in April from March and was within the BSP’s monthly forecast range of 4.2-5.0 percent for the month.

The resulting year-to-date average inflation rate of 4.5 percent was above the Government’s annual inflation target of 3.0 percent ± 1.0 percentage point for the year.

On the other hand, core inflation, which excludes selected volatile food and energy items to depict underlying demand-side price pressures, slowed down to 3.3 percent year-on-year in April from 3.5 percent in the previous month.

On a month-on-month seasonally adjusted basis, inflation was slightly higher at 0.1 percent in April from zero in March. Inflation was steady in April as the slowdown in food inflation was offset by higher price increases for non-food items. Food inflation eased as year-on-year rice inflation turned negative while vegetable inflation also declined due to ample domestic supply.

Furthermore, slower price increases for fruits as well as milk, cheese, and eggs also contributed to the moderation in food inflation. These combined more than offset the increase in meat and fish inflation. Meanwhile, year-on-year non-food inflation rose in April compared to the previous month, in part, due to higher electricity rates and the increase in transport inflation.

The latest outturn is consistent with the BSP’s expectations that inflation would remain elevated in 2021, owing to supply-side pressures, before settling close to the midpoint of the target range in 2022.

The balance of risks to the inflation outlook remains broadly balanced around the baseline projection path for 2021, while leaning toward the downside in 2022. The Monetary Board will consider the latest price developments along with information from the Q1 2021 national income accounts in its review of the monetary policy stance on 13 May 2021.

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