Higher food, fuel prices push inflation up in April

Posted at 05/04/12 9:59 AM

MANILA (UPDATE) - Philippine inflation quickened for the first time in six months in April due to higher food,  utility and fuel charges, but interest rates are seen firmly on hold at current record low levels as monetary authorities focus on supporting growth. 

The consumer price index rose to an annual 3.0 percent in April, higher than the 2.6 percent estimated by analysts, and at the top end of the central bank's 2.1 to 3.0 percent forecast range for the month. The CPI was at 2.6 percent in March.

Inflation in April grew 0.8 percent from March, the fastest month-on-month rise in more than a year. 

Despite the acceleration in prices, Finance Minister Cesar Purisima said food costs, which comprise more than half of the consumer price basket, remained "well under control". 

Over the past four months, annual inflation has averaged 3.0 percent, the bottom of the central bank's 3 to 5 percent inflation target this year, allowing monetary authorities to keep an easy policy stance. 

"It is way too premature to suggest a reversal of policy course any time soon," said Vishnu Varathan, economist at Mizuho Corporate Bank in Singapore.   

"Today's inflation data just gives us reason to wait and see how growth-inflation risks unfold further down the road," he said. 

Most economists in a Reuters quarterly poll last month expect the central bank to leave its key overnight borrowing rate at a record low of 4 percent for the whole year. Some forecast another 25 basis point cut in the second half of 2012.