POLL: April inflation likely slower at 3.1%

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Metro Manila (CNN Philippines, May 3) — A sustained drop in rice prices likely pulled inflation even lower in April, analysts said.

CNN Philippines' poll among 15 economists resulted in a 3.1 percent median, suggesting the pace of price increases may have softened for the sixth straight month.

Inflation tracks the movement of prices of basic goods and services such as food, housing, utilities and transport.

From a nine-year high of 6.7 percent in September and October last year, headline inflation continued to drop in succeeding months to 3.3 percent in March, the lowest in a year. This also marked the second month when inflation fell within the 2-4 percent target range set by the Bangko Sentral ng Pilipinas (BSP).

The analysts' forecasts compare to the 2.7 to 3.5 percent estimate range given by the central bank ahead of the official data release on May 7.

"The heavily-weighted food and non-beverage index again may have declined further. However, prices of fuel and electricity costs have risen offsetting the decline in basic food prices in general," said Ruben Carlo Asuncion, chief economist of the Union Bank of the Philippines.

Gasoline firms implemented five straight weeks of price increases for pump prices in April, mirroring the movement of world crude rates at a time of tight supply. But Emmanuel Lopez, economics professor and dean of the Letran Graduate School, said rising oil prices are "not that significant" to affect the cost of basic goods.

Economics professor Ernesto Gonzales from the University of the Philippines-Manila added that higher taxes on fuel due to the tax reform law may push inflation past the BSP's estimate, as he sees the April rate at 3.8 percent.

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The BSP expects full-year inflation to settle at three percent, spelling a huge drop from last year's 5.2 percent average, led by a surge in food prices amid supply problems for rice and vegetables. Officials are even seeing the monthly rate trending below three percent during the second half of 2019.

Inflation averaged 3.8 percent in the first quarter.

Authorities said they want inflation within target and money supply to further tighten before they cut the reserve requirement for banks. BSP Governor Benjamin Diokno said that reserve and interest rate cuts are "inevitable," but clarified that timing is key. 

CNN Philippines Correspondent Rex Remitio contributed to this report.