Inflation rate surged to 4.3 percent in March, the highest in more than five years, driven by higher rice prices and the impact of the tax reforms on commodity prices this year.
Data from the Philippine Statistics Authority which began using the 2012 price index this year said the March inflation was faster than the revised 3.8 percent in February and 3.1 percent a year ago. It also breached the government’s full-year inflation target of 2 percent to 4 percent.
Inflation in the first quarter averaged 3.8 percent, below the target range.
The PSA said using the old 2006 price index, inflation rate in March accelerated to 4.8 percent from 4.5 percent in February.
The Bangko Sentral ng Pilipinas said in a statement that inflation, using the 2012-based CPI series, would likely average near the high-end of the target range in 2018 before decelerating to the midpoint of the target range in 2019.
“The elevated path of inflation in 2018 along with rising inflation expectations will be continually assessed to guard against potential second-round effects from developing and inflation becoming broader based,” it said.
“Nevertheless, non-monetary measures such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash transfers, as well as transport subsidies are expected to help mitigate these inflationary impulses,” it said.
The Bangko Sentral said the proposed reforms in the rice industry could help temper price pressures.
The Bangko Sentral said that its decision on the monetary policy stance would remain data-dependent and that it would remain vigilant in evaluating price conditions and ready to take appropriate measures as necessary to ensure that inflation would remain consistent with the target.
The National Economic and Development Authority said the government should continue to be proactive in maintaining price stability and cushioning the impact of higher consumer prices on the poor following the uptick in inflation.
Neda officer-in-charge and Undersecretary for policy and planning Rosemarie Edillon said proactive measures would be vital in managing inflation and mitigating its impact especially on the poor.
“The government remains vigilant to price pressures, especially on food consumed by the poor such as rice,” she said.
Prices of rice rose 3.6 percent in March, faster than the 2.8-percent in February. Farm gate prices of palay have been on an upward trend since the second week of January, which in part, contributed to higher wholesale and retail prices of rice.
Edillon cited the urgency to fast-track the amendments of Republic Act 8178 or the Agricultural Tariffication Act, which would remove the quantitative restrictions on rice importation, and eventually open imports to private traders and allow the National Food Authority to focus on ensuring buffer stocks for rice.
“Without this measure, containing food inflation pressures will be a challenge given the diminishing rice stocks,” Edillon said.
The Philippine Statistics Authority said a number of commodity groups exhibited higher annual rates during the month. Alcoholic beverages and tobacco increased 18.6 percent; food and non-alcoholic beverages, 5.9 percent; housing, water, electricity, gas and other fuels, 2.9 percent.
Furnishing, household equipment and routine maintenance of the house grew 2.7 percent; health, 2.4 percent; communication, 0.3 percent; and restaurant and miscellaneous goods and services, 3 percent.
“The rest of the commodity groups retained their previous month’s growth with the transport index registering a slower annual rate of 4.6 percent,” the PSA said.
The Department of Finance earlier predicted that inflation in March hit as high as 5 percent using the 2006 consumer price index.
“Sin products are significantly driving the inflationary pressure. Of the 4.1-percent forecast inflation rate for March, sin products account for as much as 0.5 percentage point, much higher than their contribution of only 0.16 percentage point in the same month last year,” the agency said in an economic bulletin.