THE Bangko Sentral ng Pilipinas (BSP) projected inflation to have hit slightly slower in March, owing largely to the downward adjustments of utility and food prices during the month.
BSP Governor Benjamin Diokno told reporters on Wednesday the Central Bank projects inflation to have hit 4.6 percent in March, with a range of 4.2 to 5 percent.
While this projection is slightly lower than the 4.7-percent inflation in February, it is still beyond their 2- to 4-percent target range and almost double the 2.5-percent inflation seen in March 2020.
“The downward adjustment in Meralco electricity rates as well as lower prices of key food items due to improved supply conditions and the continued implementation of price caps on meat products are the main sources of downside prices pressures during the month,” Diokno said. “However, these factors could be partly offset by higher domestic oil prices and the depreciation of the peso,” he added.
In their March monetary policy meeting, the BSP announced they adjusted their average inflation forecast for 2021 to 4.2 percent, up from the 4-percent projection in the previous meeting. This means that the BSP is preparing for inflation to breach the government’s target of 2 to 4 percent for this year.
For next year, the BSP also revised its inflation forecast slightly upward but still within target from 2.7 percent in the previous meeting now to 2.8 percent.
“Moving forward, the BSP will continue to monitor evolving economic and financial conditions to ensure that the monetary policy stance remains consistent with the BSP’s price stability mandate,” Diokno said.
On the same day, Security Bank chief economist Robert Dan Roces forecasted inflation to have hit 4.8 percent in March and average to 5 percent by year-end.
‘We expect headline’
inflation to be elevated this year and average 5 percent, with the threat of forward inflationary pressures mostly emanating from commodity prices led by oil that could see a resurgence of upward movements should major economies reopen again; and this is on top of the low base effects from 2020,” Roces said.
“However, the reimposed ECQ in the Greater Manila Area as well as some localized curbs in major cities nationwide could cause slower price growth relative to the extent of the new lockdowns, thus our estimates have a downward bias. We maintain that core inflation will be a key determinant of consumption recovery, as the release of pent-up demand should increase consumption if the curbs are lifted amidst a wider vaccine rollout that may improve consumer confidence,” he added.
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