NextGen Day

An economist predicts that headline inflation dropped to 7 percent in April as some food prices started to decline.

According to RCBC Chief Economist Michael Ricafort, “Some food prices already started to ease recently on better weather conditions that led to some increase in supply that helps in lowering food prices, after some storm damage in the latter part of 2022 up to early 2023, especially the shear line that hit some parts of the Visayas and Mindanao.

The limited importation of sugar and onions, the one-year extension of the lower import tariffs on items like pork, rice, corn, and coal, as well as other non-monetary steps to help enhance local supply, are all factors he cited as contributing to the lower food prices.

The 7.6 percent inflation rate seen in March was less than Ricafort’s prediction for the month. However, it remains higher than the government’s target range of 2 to 4 percent.

Although it is anticipated that inflation will have decreased, Ricafort said that countervailing risk factors could still cause prices to rise in some cases. These risk factors include higher rice prices, higher electricity, and water rates, and higher pork prices as a result of African swine fever (ASF).

El Nino, which he said will affect the nation in the latter half of this year and into the beginning of the following year, might also affect agricultural supplies and production, which could cause some price increases and general inflation.

However, Ricafort pointed out that because of higher base effects, inflation may have already peaked in the first quarter of the year and may begin to sharply decline in the second half of 2023.

“The anniversary of the local wage hikes, transportation hikes, and second-round inflation effects starting June-July 2023 would quantitatively lead to further year-on-year deceleration of year-on-year inflation in the second half of 2023 due to much higher inflation base effects by then that could potentially lead to the much slower inflation rate to as slow as 3 percent to 4 percent year-on-year levels by the latter part of 2023,” he continued.

The official April 2023 inflation figures will be made public on Friday by the Philippine Statistics Authority.

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