April inflation 4.1 pct, slightly faster than forecast

Reuters

Posted at May 06 2014 10:24 AM | Updated as of May 07 2014 01:55 AM

MANILA - Philippine inflation in April was slightly faster than the market expected due to higher food and utility costs, potentially boosting the chances of further policy tightening by the central bank at its meeting this week.

Last month's annual headline inflation rate was 4.1 percent, the statistics agency said on Tuesday, faster than a 4.0 percent consensus estimate in a Reuters poll.

The central bank had expected annual inflation in April at 3.6 to 4.5 percent.

The Philippine statistics agency said the faster April inflation was mainly due to higher food, utilities, non-alcoholic beverages, and transport costs.

Food and non-alcoholic beverage prices rose an annual 6.2 percent in April against 5.8 percent in March.

Food prices alone climbed 6.5 percent, compared with 6.0 percent in the previous month. Housing, water, electricity, gas and other fuels rose an annual 3.0 percent, faster than 2.7 percent in March.

Inflation in the first four months of the year averaged 4.1 percent, above the mid point of the central bank's 3-5 percent target for the year.

Thirteen of 15 economists in a Reuters poll expect the central bank to keep its overnight borrowing rate steady at a record low of 3.5 percent on Thursday, while two forecast a 25-basis-point hike.

Majority, or eight economists, said another 1 percentage point increase in banks' reserve requirement ratio may be on the
cards, while three flagged a possible 25 bps hike in the short-term Special Deposit Accounts (SDA) rate.

Monetary authorities left the policy rate steady on March 27 but raised the reserve requirement ratio by 1 percentage point to 19 percent.

The central bank last week said it was ready to impose measures to stem liquidity growth and dampen inflationary pressures, but has noted there was no pre-set course for policy normalisation.

The government is targeting 6.5 to 7.5 percent economic growth in 2014.