Philippine inflation eased for the third consecutive month, with headline inflation settling at 6.6% in April 2023 while core inflation, which excludes volatile food and fuel prices, was also lower at 7.9% from the previous month\u2019s 8.0%. April\u2019s inflationprint was within the Bangko Sentral\u2019s guidance of 6.3-7.1% for the period and brought down the year-to-date inflation average to 7.9%. This figure, however, is still very much above the BSP\u2019s target inflation range of 2.0% to 4.0%.<\/p>\n\n\n\n
While there are signs that inflation has peaked since reaching a high of 8.7% in January, the National Economic and Development Authority (NEDA) warns that there are still upside risks with potential transport fare increase, wage hikes, and domestic food supply pressures. In particular, NEDA chief Arsenio Balisacan expressed concern about food supply problems due to El Ni\u00f1o and the resurgence of African swine fever.<\/p>\n\n\n\n
Nonetheless, easing inflation may allow the BSP to consider holding interest rates steady after one last 25 bps hike to maintain parity with the US Federal Reserve rates and protect the peso. We maintain our stance that a stable interest rate environment is still good for business even if rates remain elevated, as businesses will at least have a stable benchmark when consider sources of funding and future expansion plans.<\/p>\n\n\n\n