MANILA (Updated 1:04 p.m.) — Philippine annual inflation accelerated to a three-year high in April, as a surge in fuel prices triggered by the Middle East conflict raises the chance of more policy tightening.
Consumer prices rose 7.2% last month, the statistics agency said on Tuesday, the highest since March 2023. That was above the 5.5% median forecast in a Reuters poll of economists.
The April print also breached the central bank’s forecast range of 5.6% to 6.4% for the month.
Emilio Neri, lead economist at Bank of the Philippine Islands, said the BSP may be forced to do another off-cycle meeting and hike rates to stem inflation.
“Yes, we won’t rule out a forceful intermeeting hike. We can’t rely on supply side solutions to ensure that Philippine inflation is kept well-anchored in this kind of volatile environment.”
The Philippines depends heavily on Middle East oil, leaving it vulnerable to supply shocks and price volatility during periods of geopolitical conflict.
Inflation has now averaged 3.9% in the first four months of the year, putting more pressure on the Philippine central bank as it approaches the upper limit of its 2% to 4% range for the full-year.
Diesel inflation for the month rose by 122.7% and gasoline inflation accelerated by 60%, reaching all-time highs based on available government data.
Higher food, transport and utility costs also drove consumer prices higher last month, the statistics agency said.
On a month-on-month basis, inflation stood at 2.6%, the highest in 26 years.
Last month, the Bangko Sentral ng Pilipinas hiked its key interest rate to 4.50% to keep a lid on rising inflation, warning inflation was expected to reach 6.3% this year. Governor Eli Remolona signalled the prospect of more rate hikes as needed to curb price pressures.
The central bank holds its next policy meeting on June 18. It last held an off-cycle meeting on March 26, becoming the first central bank in Asia to do so.
The annual core inflation rate, which strips out volatile food and energy prices, was 3.9% last month.
—Reporting by Mikhail Flores; Editing by John Mair and Jacqueline Wong