Inflation could have hit 1.7-2.5% in March – BSP

INFLATION could have fallen to a near five-year low in March, the Bangko Sentral ng Pilipinas (BSP) said on Monday, following lower prices of key food items, particularly rice, as well as a stronger peso.

Ahead of the Philippine Statistics Authority's release of data for the month this Friday, the BSP said that consumer price growth would likely be in the 1.7- to 2.5-percent range — an even spread from February's 2.1-percent result.

The bottom end of the forecast is lower than the 1.9 percent seen in September last year, which was the lowest since May 2020's 1.6 percent and also the last time that the rate fell below the central bank's 2.0- to 4.0-percent target.

Analysts polled by The Manila Times expect inflation to have hit 2.0 percent last month.

“Upward price pressures for the month emanate from higher electricity rates and higher prices for fish and meat,” the central bank said in a statement.

“Nonetheless, these are expected to be offset by lower prices of rice, fruits, and vegetables, owing to favorable domestic supply conditions as well as the peso appreciation,” it added.

February's inflation result was lower than expected and another slowdown could push the BSP into resuming interest rate cuts during next week's policy meeting.

On Monday, it said that it would “continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.”

BSP Governor Eli Remolona Jr. has said that there is a “good chance” that the central bank's policymaking Monetary Board will deliver a 25-basis point (bps) rate cut on April 10.

The BSP's policy rate currently stands at 5.75 percent after three 25-bps cuts last year. The Monetary Board unexpectedly kept interest rates unchanged in February, citing uncertainties over the outlook for inflation and economic growth.