Inflation rate eased to 4.5 percent in March from 4.7 percent in February after five consecutive months of acceleration, on lower annual increases in food and non-alcoholic beverages, the Philippine Statistics Authority said Tuesday.
Data showed despite the slight slowdown, the March inflation remained the second fastest in the last 27 months. It was also faster than 2.5 percent recorded a year ago.
Inflation in the first-quarter averaged 4.5 percent, above the government’s target range of 2 percent to 4 percent for 2021.
“The slowdown in inflation at the national level was primarily due to the lower annual increment registered in the heavily-weighted food and non-alcoholic beverages at 5.8 percent in March 2021, from 6.7 percent inflation in February 2021,” the PSA said in a statement.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the March inflation was within the BSP’s forecast range of 4.2 percent to 5 percent for the month.
“The overall latest outturn is consistent with expectations that inflation could settle above the high end of the target in 2021, reflecting the impact of supply side constraints on domestic prices of key food commodities, such as meat, as well as the continuing rise in world oil prices,” Diokno told reporters in a message following the release of the March inflation data.
“Nevertheless, inflation is still seen to return to within target band in 2022 as supply side influences subside. At the same time, timely and effective implementation of direct measures by the national government could contribute to easing price pressures,” Diokno said.
He said the balance of risks to inflation outlook remained broadly balanced around the baseline path in 2021, while leaning toward the downside in 2022. He said the tighter domestic supply of meat products and improved global economic activity could lend upward pressures on inflation.
“However, [the] ongoing pandemic also continues to pose downside risks to the inflation outlook as the recent surge in virus infections and challenges over mass vaccination programs continue to temper prospects for domestic demand,” Diokno said. Julito G. Rada
Diokno said the prevailing monetary policy settings remained appropriate to support the government’s efforts to facilitate the recovery of the economy.
He assured that the BSP was ready to take immediate measures as appropriate to ensure that the monetary policy stance continues to support the BSP’s price and financial stability objectives.
ING Bank Manila senior economist Nicholas Mapa said that although it might be too early to deem the March 4.5 percent inflation the peak for the year, “we do note that the likelihood of inflation hitting 5 percent now diminishing somewhat.”
Mapa cited the previous statement of the BSP that it would retain its accommodative stance because of the “transitory” nature of the current spike in prices.
“Monetary authorities remain hopeful inflation will decelerate once supply-side remedies to ASF takes root although the latest central bank inflation forecasts pegs inflation to settle above target in 2021. Nonetheless, we expect BSP to keep policy rates at 2 percent in order to bolster the economic recovery with several regions now under strict lockdown due to a recent spike in new COVID-19 infections,” Mapa said.
Mapa sid receding concerns about inflation might calm the local bond market in the near term while the peso was expected to outperform regional peers as soft import demand limits depreciation pressure.
National Statistician and Civil Registrar General Dennis Mapa said annual increases also decelerated in the indices of alcoholic beverages and tobacco, 12.1 percent; furnishing, household equipment and routine maintenance of the house, 1.9 percent; communication, 0.2 percent; and restaurant and miscellaneous goods and services, 3.1 percent.
Inflation for food index at the national level slid to 6.2 percent during the month from 7.0 percent in February 2021. Inflation for food in March was posted at 2.6 percent.