THE central bank continues to see inflation breaching the target range in March, as oil prices rose and the peso weakened against the US dollar.
Headline inflation during the month likely settled within 4.2% to 5%, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in a Viber message to reporters. This is still beyond the 2-4% target set by the BSP.
The BSP’s point inflation projection for March is 4.6%, which, if realized, will be a tad slower than the 4.7% print in February but higher than the 2.5% a year ago.
Mr. Diokno said the hike in oil prices as well as the peso depreciation could drive the uptick in inflation.
Global oil prices have risen on the back of a widely anticipated recovery in demand as the world economy shows signs of recovery.
Locally, gasoline, diesel, and kerosene prices have increased by P6.15, P4.60, and P3.50 per liter as of March 30 year to date, based on data from the Department of Energy.
Meanwhile, the peso closed at P48.53 per dollar on Wednesday, up 1.5 centavos from its previous close. The local unit has depreciated by 50.7 centavos or by 1.05% from its P48.023 finish on Dec. 29, 2020 — the last trading day for the year.
On the other hand, Mr. Diokno said downward adjustments in electricity rates of the Manila Electric Co. (Meralco) and the “lower prices of key food items due to supply conditions and the continued implementation of price caps on meat products” are factors that could have contributed to easing inflation during the month.
Meralco’s overall power rate for March stood at P8.3195 per kilowatt-hour (kWh), which is the lowest overall power rate since August 2017, the firm said. This means that households consuming 300 kWh, 400 kWh, and 500 kWh saw their monthly bills go down by P108, P144, and P180, respectively.
Meanwhile, the government-approved price cap in Metro Manila for pork and chicken products remains in effect until April 8.
“Moving forward, the BSP will continue to monitor evolving economic and financial conditions to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate,” Mr. Diokno said.
Last week, the central bank maintained the key policy rate at 2% as it continues to provide support to the economy amid emerging risks from the fresh surge in coronavirus cases. The BSP noted the inflation uptick in recent months has been driven by supply-side factors and is better addressed through non-monetary measures.
Officials, however, assured that the BSP will be ready to act in case of evidence of second-round effects such as a clamor for a hike in wages and transport fares.
The Philippine Statistics Authority will report the March inflation data on April 6. — Luz Wendy T. Noble