The country’s inflation rate is only seen to go below four percent by the fourth quarter of the year, according to the latest issue of the Market Call.
The report released by First Metro Investment Corp. and the University of Asia and the Pacific yesterday said inflation, which remained at 4.5 percent in April, should move sideways for the rest of the first semester.
It said while severely weakened aggregate demand dampens price pressures, supply side constraints, both here and abroad, remain the key factor why inflation is seen to go below four percent only by the fourth quarter of the year.
“At home, supply constraints, aggravated by lack of decisiveness in reopening the economy and LGU (local government unit) backyard restrictions remain key factors that would keep headline inflation above four percent through Q3,” the report said.
“While headline inflation rate may not fall below four percent year-on-year anytime soon, neither do we see the BSP (Bangko Sentral ng Pilipinas) even allowing the thought of monetary tightening in the light of the economy’s stubborn weakness,” it added.
The Philippine Statistics Authority earlier reported the country’s headline inflation rate in April 2021 remained unchanged from the previous month at 4.5 percent, above the government’s target range of two to four percent.
Meat inflation reached a record high at 22.1 percent, as pork inflation soared to 57.7 percent and remains as the top contributor to the headline inflation rate with 1.4 percentage points.
The inter-agency Development Budget Coordination Committee in its recent meeting however has kept the average inflation target for 2021 to 2024 at two to four percent.
