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Headline Inflation Surprises Lower, But Core Inflation Only Just Off Multi-Decade Highs

PHILIPPINES

Apr inflation came in below market expectations, +6.6%, (7.0% forecast and 7.6% prior). However, it was close to the mid-point of the BSP's expectations (6.3-7.1%). Headline inflation is moving off early the 2023 peak (8.7% y/y in Jan). We saw a continued slowdown in both food and transport costs. CPI was negative (-0.2%) for the second straight month.

  • Still, core inflation is only just down off multi-decade highs, printing at 7.9% y/y for Apr, versus 8.0% in Mar. Moreover, official comments from National Economic and Development Authority Secretary Balisacan stated that the risks to the inflation outlook remain tilted to the upside. The BSP made similar comments post the release.
  • However, Finance Secretary Diokno stated the numbers imply a continued downward trend in inflation pressures.
  • BSP added that it will take this CPI print and Q1 GDP, which is out next week, into account at the next policy meeting, which is scheduled for May 18.

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