THE Bangko Sentral ng Pilipinas (BSP) is certain that inflation continued to have fallen back to below 4 percent in March this year, as lower food prices will continue to mitigate the upside pressures of other key commodities during the period.
In its month-ahead forecast, the BSP Department of Economic Research announced that it projects March inflation to settle within the 3.1 to 3.9 percent range.
“Higher domestic oil prices and upward adjustment in electricity rates provide upside price pressures to inflation for the month. These may be partly offset by lower prices of rice and other agricultural commodities due to the arrival of imports,” the BSP said.
“Going forward, the BSP will continue to closely monitor evolving inflation dynamics and ensure that the monetary-policy stance remains appropriate to support BSP’s price stability objectives,” it added.
Meanwhile, Security Bank chief economist Robert Dan Roces said they see inflation falling further to 3.5 percent in March.
“Rice and corn data for March shows a significant drop in rice prices compared with January,” Roces said, but added that the prices are just approximately even when compared to the February level.
“For fuel prices, comparing with end-February numbers shows that diesel prices slightly increased, kerosene dropped by around 2 pesos, while gas was higher by around 3 pesos,” he added.
“Thus, we’re seeing continued tapering of inflation as the combined effects of last year’s monetary-policy initiatives and better supply-side conditions are felt. However, exogenous drivers such as rising global oil prices must be monitored,” he added.
The Philippine Statistics Authority (PSA) will be announcing the country’s inflation numbers in the first week of April.
In the first two months of the year, inflation fell to an average of 4.1 percent, with the latest print in February falling to 3.8 percent.
This is a development from the peak inflation of 6.7 percent in September and October last year after the government made monetary and nonmonetary policies to pull inflation back to target. The target range is 2 to 4 percent as set by the BSP for this year up until 2021.
Earlier in March, the BSP revised the inflation forecast to 3 percent for 2019, from the 3.1 percent for 2019 in the previous monetary-policy meeting. For 2020 the BSP retained its forecast at 3 percent.
The lower inflation was the basis behind the recent decision to keep all monetary-policy levers unchanged in the March meeting.
Confidence boosted
Also, the latest business and consumer expectations survey of the Central Bank showed that Filipinos are already feeling the effects of the lower inflation rate in recent months, as both firms and consumers showed an increase in confidence in the country’s economic conditions for the first quarter of the year.
Businesses in the country attributed their optimism to expectations of more business activities during the start of the campaign period for the forthcoming midterm elections, increased orders and consumer purchases with the easing of inflation, as well as higher government infrastructure spending of the current administration, introduction of new and enhanced business strategies and processes, and expansion of businesses and new product lines.
They were also optimistic that their business operations would benefit from the favorable macroeconomic conditions in the country, particularly lower inflation and interest rates.
Consumers, meanwhile, attributed their more favorable outlook on the Philippine economy to additional/high income, improvement in peace and order, availability of more jobs and good governance.
Furthermore, households anticipated stable prices of goods and salary increases for the next 12 months.