Inflation accelerates to 3.7% in March

MANILA, Philippines — The increase in the prices of goods and services in the country accelerated for the second straight month in March on the back of faster upticks in food and transport costs, the Philippine Statistics Authority (PSA) reported yesterday.

In a press conference, National Statistician Dennis Mapa said the country’s headline inflation or the rate of increase in the average prices of consumer goods and services went up to 3.7 percent in March from 3.4 percent in February.

The inflation print last month was within the 3.4 to 4.2 percent forecast of the Bangko Sentral ng Pilipinas (BSP). However, it was lower than the 7.6 percent in March last year.

Driving the uptrend in overall inflation in March was the heavily weighted food and non-alcoholic beverages commodity group, which climbed to 5.6 percent in March from 4.6 percent in February.

For food alone, inflation picked up to 5.7 percent in March from 4.8 percent a month earlier.

Mapa said this was the highest food inflation since the 5.8 percent recorded in November last year.

Rice inflation climbed to 24.4 percent in March from 23.7 percent in February and was the fastest since the 24.6 percent in February 2009.

According to Mapa, the prices of the three classifications of rice such as regular-milled, well-milled and special rice tracked by the PSA registered year-on-year and month-on-month increases in March.

“Our expectation is (rice prices) will actually increase strongly until July because of base effects, unless there is really some intervention that will happen in the market that will lead to a drop in prices. We don’t see any for now,” he said.

While lower rice prices might start to be seen in August, he said the staple might still have double-digit inflation based on the PSA’s computation.

Also contributing to the higher food inflation was meat, which increased to two percent in March from the previous month’s 0.7 percent.

Other main drivers of the faster overall inflation cited by the PSA are the transport commodity group, which registered a higher uptick of 2.1 percent in March from the previous month’s 1.2 percent, as well as restaurants and accommodation services with a 5.6 percent uptick last month from 5.3 percent in February.

From January to March, inflation averaged 3.3 percent, within the government’s target range of two to four percent.

Core inflation, which strips off selected food and energy items, meanwhile, slowed to 3.4 percent in March from 3.6 percent in the previous month. It was also lower than the eight percent booked in March 2023.

Diwa Guinigundo, former BSP deputy governor and now country analyst at GlobalSource Partners, said in a brief that the higher inflation in March was expected because there has been little progress in ensuring sufficient food supply in the country, even with monetary policy remaining tight.

“While headline inflation continues to perk up, core inflation is beginning to slow down. This means that supply-side inflation factors remain strong and the government’s non-monetary measures seem limited in its mitigating impact. On the other hand, the tight monetary policy maintained by the BSP proves correct with the moderating core inflation,” Guinigundo said.

With inflation settling close to the upper end of the inflation target and with the US Federal Reserve still on hold, ING senior economist Nicholas Mapa said he expects the BSP Monetary Board to keep rates unchanged at 6.50 percent.

As the BSP indicated it expects inflation to go past the upper end of the two to four percent inflation target band in the coming months due to tight supply for agriculture products because of the El Niño-induced drought, Mapa said the BSP “may extend their pause beyond the upcoming April meeting, with the potential rate cut only likely in the second half of the year.”

The National Economic and Development Authority (NEDA) said the government remains committed to ensuring enough food and energy supplies, while proactively addressing price fluctuations as El Niño conditions persist and La Niña is likely to pose a threat in the latter half of the year.

“The government is closely monitoring weather conditions and their effects on the supply of key commodities, such as food and energy, to protect Filipino households from sudden price increases,” NEDA Secretary Arsenio Balisacan said.

“To ensure sufficient water supply and support our farmers during the dry season, the Department of Environment and Natural Resources has been tasked with monitoring water supply in the country. Simultaneously, the Department of Agriculture is proactively extending assistance to farmers adversely affected by the drought,” Balisacan said.

The NEDA chief added that the government is starting preparations for La Niña, with the measures aimed at ensuring food and energy security, availability of clean water supply and public health and safety.

To help ease the burden of high electricity costs, the NEDA said eligible consumers could receive a 100 percent discount on their monthly bills through the government’s Lifeline Rate program, which has already registered 4.9 percent of the 4.6 million Pantawid Pamilyang Pilipino Program beneficiaries as of January this year.

With the interagency Development Budget Coordination Committee retaining its target range for inflation at two to four percent for this year until 2028, the government is optimistic monetary and non-monetary measures will rein in commodity prices and prevent future surges.

“While we continue to face multiple risks, such as potential adjustments in transportation fares, wages, and service utility fees, the Marcos administration is committed to managing the country’s inflation. This will be key to sustaining our growth momentum and providing a better life for our countrymen,” Balisacan said.