Inflation eases further to 6.6 percent in April Oil recovers on supply fears but demand woes persist

Oil prices rebounded on Thursday, with both benchmarks dropping around 5 percent in previous trade as supply concerns caused by Iran’s seizure of an oil tanker and renewed tensions between Ukraine and Russia overshadowed demand woes caused by the US Federal Reserve’s (Fed) decision to cut interest rates further.

International benchmark Brent crude traded at $73.33 per barrel at 10:41 a.m. local time (0741 GMT), a 1.38 percent increase from the closing price of $72.33 a barrel in the previous trading session.

At the same time, the American benchmark West Texas Intermediate (WTI) traded at $69.33 per barrel, up 1.06 percent from the previous session’s close of $68.60 per barrel.

Oil prices came under pressure ahead of the US Federal Reserve’s new monetary policy decision, as the world’s largest oil-consuming country battled high inflation.

However, demand concerns were alleviated after Iran’s Islamic Revolutionary Guards Corps (IRGC) confirmed the seizure of a foreign oil tanker in the Strait of Hormuz.

Inflation rate continued its downtrend for the third straight month as it further cooled down in April amid the slowdown in food, transport, and utility costs during the period, the Philippine Statistics Authority (PSA) reported on Friday.

The reason for holding the oil tanker remains unclear, although the IRGC called the vessel a “violator.”

Wednesday’s incident comes a week after the Iranian army’s naval division seized a Marshal Islands-flagged “transgressor” tanker, and directed it to the coastal waters of Iran in the Sea of Oman following an encounter with an Iranian vessel.

Supply concerns intensified after the Kremlin said two Ukrainian drones attacked the Kremlin residence of Russian President Vladimir Putin overnight on Wednesday, calling it a “terrorist” assassination attempt.

While Ukraine denied any involvement in the attack on the Kremlin, Russia confirmed it had opened a criminal case for the alleged drone attack by Ukraine.

Mounting demand woes

At a virtual press conference, National Statistician and PSA chief Claire Dennis Mapa reported that inflation — the rate of increase in the prices of goods and services — eased to 6.6% last month from 7.6% in March, bringing the yearto-date rate to 7.9%.

This is the third time that inflation decelerated from a peak of 8.7% in January.

Year-on-year, however, the inflation print in April was still faster than the 4.9% rate seen in April 2022.

Last month’s inflation rate falls within the Bangko Sentral ng Pilipinas’ forecast range of 6.3% to 7.1%.

“Ang pangunahing dahilan ng pagbagal ng antas ng inflation nitong Abril 2023 kaysa noong Marso 2023 ay ang mas mabagal na paggalaw ng presyo ng Food and Non-Alcoholic Beverages,” Mapa said.

(The main reason for the slowdown of inflation in April 2023 versus March 2023 was the slower movements in the prices of Food and Non-Alcoholic Beverages.)