The early signs of summer, indicated by the temperature beginning to climb higher up the scale, were seen helping push inflation, or the rate of change in prices, still higher in March to as much as 3.8 percent, the Bangko Sentral ng Pilipinas (BSP) said on Monday.
In a forecast, BSP Governor Amando M. Tetangco Jr. said the projected growth in prices was to remain above 3 percent in March, as the effects of higher energy costs and global petroleum prices weigh heavily on the basket of commodities Filipinos typically consume during the month.
Tetangco told reporters the BSP anticipated inflation to have hit from 3 percent up to 3.8 percent in March. “The higher power rates in Meralco [Manila Electric Co.]-
serviced areas due to the Malampaya maintenance shutdown, along with the weaker peso, could be partially offset by the decline in fuel and food prices this month,” the Central Bank governor said. Inflation in February averaged the highest since 2014 at 3.3 percent.
Despite the upward trek of inflation in previous months, the Central Bank recently announced it has scaled back the inflation forecasts for both 2017 and 2018.
Central Bank Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo announced just last week the revised forecast inflation of only 3.4 percent this year, down from the February forecast of 3.5 percent.
The inflation forecast for 2018 was also scaled back from 3.1 percent originally to only 3 percent.
The BSP, likewise, said the balance of risks surrounding the inflation outlook remains tilted toward the upside, as dictated by the transitory impact of the proposed tax-reform package and possible adjustments in transportation fares and electricity rates.
The Monetary Board also cited the “beneficial effects” on inflation of the removal of quantitative restrictions on rice importation.
Rice accounts for 9 percent of the consumer price index, which typically represents the proverbial basket of commodities regularly consumed by Filipinos.
Given the current inflation path, Tetangco was careful in giving away hints as to where the policy settings were headed, saying only the BSP will continue to monitor developments and keeping the monetary targets within bounds.
“The BSP will remain watchful of economic and financial developments that could affect the inflation outlook, in line with its commitment to price stability conducive to a balanced and sustainable growth of the economy,” Tetangco said.
The inflation target for the year still ranges from a low of 2 percent to no more than 4 percent.