Inflation rate in March climbed to a five-month high of 4 percent from 3 percent in February on the back of higher transport and fuel prices, the Philippine Statistics Authority said Tuesday.
The figure brought the average inflation in the first quarter to 3.4 percent, above the midpoint of the target range of 2 percent to 4 percent this year. The inflation averaged 4 percent In the first quarter last year.
National statistician and civil registrar general Dennis Mapa, however, said the March inflation was slower than 4.1 percent registered a year ago.
“The increase in the inflation for indices of food and non-alcoholic beverages at 2.6 percent; housing, water, electricity, gas, and other fuels, 6.2 percent; and transport at 10.3 percent contributed largely to the upward trend of the overall inflation during the month,” Mapa said.
Inflation for food rose to 2.8 percent in March from 1.1 percent in February. In the same month in 2021, food inflation was observed at 5.6 percent.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the March inflation was within the BSP’s forecast range of 3.3 percent to 4.1 percent for the month.
Diokno said in a message to reporters that with the surge in global crude oil prices, “average inflation could breach the upper end of the 2 percent to 4 percent target range in 2022.”
“Nevertheless, average inflation is projected to decline and settle within the target band at 3.6 percent in 2023. Inflation expectations have likewise risen, but continue to be anchored to the 2-4 percent target band,” Diokno said.
He said the economic consequences of Russia’s invasion of Ukraine became a significant headwind in global economic recovery. The Russia-Ukraine conflict could affect the Philippines through slower world GDP growth, higher crude oil prices, higher world non-oil prices and potential second-round effects on inflation through transport fares, wages and food prices.
“Among all these, the main channel through which the Russia-Ukraine war could affect the Philippines is through higher oil prices,” Diokno said.
“Under these circumstances, the BSP will closely monitor the emerging risks to the outlook for inflation and growth, and remain vigilant against possible second-round effects from supply-side pressures or any shifts in the public’s inflation expectations,” he said.
Diokno assured that the BSP continues to have a wide arsenal of policy instruments to respond to possible adverse impact of external shocks. He said the BSP also supports the timely implementation of direct non-monetary measures by the government to mitigate the impact of the Russia-Ukraine conflict on global oil and non-oil commodity prices. “Previous episodes of supply-side shocks in the country have shown that these are best addressed through timely non-monetary policy interventions that could ease directly domestic supply constraints and prevent second- round effects on prices,” Diokno said.
Economic Planning Secretary Karl Kendrick Chua said the government took steps to address the inflationary pressures brought about by the conflict.
He said the Economic Development Cluster proposed interventions to manage the impact of the conflict on the economy and the people.
The EDC’s policy interventions include the expansion of supply and reducing prices of pork by extending the lower tariff of 15 percent in quota and 25 percent out quota with minimum access volume of 200,000 metric tons until December 2022; accelerating the release of imported pork from cold storages; passing the proposed Livestock Development and Competitiveness Law and pursuing the livestock value chain reform to address rising corn and feeds prices; accelerating the release of Sanitary and Phytosanitary Import Clearance from the National Meat Inspection Service’s cold storage warehouses to push up chicken inventory; and removal of all non-tariff barriers.
Chua said to cushion the impact of rising prices, the government would distribute unconditional cash transfers worth P500 per month to the poorest 50 percent of households.
Around 115,000 public utility vehicle drivers and operators aso received P6,500 each under the Pantawid Pasada program.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said inflation could pick up to 4 percent levels in the coming months because of the increase in global oil/energy and other commodity prices.