The Bangko Sentral ng Pilipinas said over the weekend inflation rate in March likely eased to as low as 3.1 percent from 3.8 percent in February, pulled down by lower prices of rice and other agricultural products.
The BSP Department of Economic Research said the March 2019 inflation was expected to settle within a range of 3.1 percent to 3.9 percent.
“Higher domestic oil prices and upward adjustment in electricity rates, provide upside price pressures to inflation for the month,” the regulator said in a statement.
“These may be partly offset by lower prices of rice and other agricultural commodities due to the arrival of imports,” it said.
The Philippine Statistics Authority is scheduled to release the March inflation data on April 5.
ING Bank Manila senior economist Nicholas Mapa said earlier the March inflation likely decelerated from 3.8 percent in February, enough to hit a three-month average that is within the target range of 2 percent to 4 percent.
Inflation in February eased to a one-year low of 3.8 percent from 4.4 percent in January, on slower increases in the prices of key commodities such as food and beverage.
The February print brought the average inflation in the first two months to 4.1 percent, near the upper limit of the target range of 2 percent to 4 percent for the year. It was the slowest inflation in a year since it was recorded at 3.8 percent in the same month of 2018.
“Slowdown in inflation remained to be primarily attributed to the slower annual increase in the index of the heavily-weighted food and non-alcoholic beverages at 4.7 percent,” the PSA said in a statement.
The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, kept the benchmark interest rates steady amid the slowdown in the inflation rate in its meeting on March 21.
Bangko Sentral Governor Benjamin Diokno said the board maintained the policy rate at 4.75 percent. The interest rates on the overnight lending and deposit facilities were also held steady.
“The board’s decision is based on its assessment that prevailing monetary policy settings remain appropriate,” Diokno said, adding that baseline inflation forecasts showed inflation settling within the target range of 2 percent to 4 percent for 2019 and 2020.
He said the inflationary pressures eased further, reflecting mainly the decline in food prices amid improved supply conditions.
The board reduced the inflation target this year to 3 percent from the estimate of 3.1 percent made in the Feb. 7 meeting. The forecast for 2020 was kept at 3 percent.
BSP Deputy Governor Diwa Guinigundo said among the factors considered for the downward revision in inflation forecasts were the latest inflation in February at 3.8 percent and the expected decline in Dubai crude oil.
“We expect the downward trajectory of inflation to continue in 2019 and 2020 and stabilize around 3 percent,” Guinigundo said.
The expected resumption of the reduction in reserve requirement did not happen but Guinigundo said this was discussed during the meeting.
Inflation peaked at a nine-year high of 6.7 percent in October, before easing to 6 percent in November and 5.1 percent in December as the immediate measures implemented by the government to curb inflation took effect.
This brought the 2018 average to 5.2 percent, above the target range of 2 percent to 4 percent.