By Katherine K. Chan, A reporter
THE PRICE IS QUICKLY GOING UP in the middle fuel, electricity and food includedEng rice, conducted the Philippines inflation surpassed the Bangko Sentral ng Pilipinas’ (BSP) target for the first time in almost two years, the Philippine Statistics Authority (PSA) reported.
The consumer price index rose to 4.1% in March from 2.4% in February and 1.8% in the same month last year.
This was the fastest pace in nearly two years or since 4.4% in July 2024 and likewise marked the first time that headline printing breached the BSP’s 2%-4% target.
Inflation in March also came in above the average forecast of 3.8% over the period BusinessWorld a survey of 18 analysts and the central bank’s average of 3.1%-3.9% for the month.
In the three months to March, inflation reached 2.8%.
The BSP said in a statement that inflation increased in March as conflicts in the Middle East disrupted global oil trade, raising prices of local fuel, electricity and rice.
“Looking forward, increasing risks to the inflation outlook require continued vigilance. The BSP will carefully consider incoming data at its upcoming monetary policy meeting to assess the need for action consistent with its mandate for price stability,” the central bank said.
National Statistician Claire Dennis S. Mapa revealed that this takeover is related to the rapid increase in prices in the transport index, especially in gasoline and diesel, which accounted for 54.8% of the overall inflation rate in March.
During the month, transport inflation stood at 9.9%, a reversal from the -0.3% clip recorded in February.
This came as rising pump prices pushed petrol and diesel consumption to the fastest pace in the last three years to 27.3% (from -5.7%) and 59.5% (from -1.3%), respectively.
Mr. Mapa said the rapid transit and food inflation were “definitely” driven by the oil crisis caused by the Middle East conflict.
He mentioned that there have been negative results in many commodity groups last month including food, housing, water, electricity, gas and others.
“Since last years, when we had an increase in the price of fuel in the world market, the impact was faster on other commodities. That’s why out of the 13 commodity groups we follow, almost ten of them increased,” said Mr. Mapa told a news conference on Tuesday.
In March, fuel retailers increased pump prices by P43.50 per liter of gasoline, P67.35 per liter of diesel and P70.90 per liter of kerosene.
Mr. Mapa said he hopes that transport inflation in the coming months will not be the same as the levels seen in 2022 or when oil markets face supply and price shocks. during the Russian invasion of Ukraine.
However, he noted that April inflation is likely to increase as fuel prices are expected to continue rising this month, adding that some commodities may still show the residual impact of the initial price hike.
“We’re definitely seeing higher prices in April because we had a series of price increases in the first week and we don’t see any downward trend.”
Meanwhile, inflation for housing, water, electricity, gas and others increased to 4.5% in March from 3.5% in February.
Electricity inflation accelerated to 9.2% in March from 6.7% in February, while liquefied petroleum gas (LPG) inflation increased to 2.2% from 2.2% in February.
Manila Electric Co. increased electricity rates by 64.27 centavos per kilowatt-hour (kWh) to P13.8161 kWh for its customers in the greater Metro Manila area. This means that households using 200 kWh per month pay about P129 more on their March electricity bill.
LPG prices were also high in March, with an 11-kilogram (kg) domestic LPG tank ranging between P818.62 and P1,128.62, based on data from the Department of Energy.
According to the Department of Economy, Planning, and Development (DEPDev), the government received 165.6 million liters of diesel in April, which it said seeks to “sustain domestic fuel supply and ease transportation costs.”
RICE PRICES
Meanwhile, rising travel costs also pushed up food prices in March, with the index for heavy food and non-alcoholic beverages rising to 3% in March from 1.8% last month.
On the other hand, rice prices continued to jump in March, bringing the inflation of the basic grain to 3.6% from 3.4% in February.
This was the first time since December 2024 that rice inflation remained in positive territory or stood at 0.8%.
Based on PSA data, the average cost of local common milled rice increased by 5.8% to P48.69 per kg in the second half of March from P46.02 per kg last year. The price of finely milled rice also increased by 8.02% year-on-year to P56.68 per kilogram, while the price of special rice increased by 3.79% to P64.07 per kilogram.
Mr. Mapa said there is a risk that the price of rice will increase significantly in the coming months as transport inflation continues to grow rapidly.
The DEPDev said the government has forced a halt to the stockpiling of fuel products and expanded the P20 rice program to ensure adequate supply and help reduce food prices across the country.
PURCHASING POWER IS FALLING
Meanwhile, headline inflation, which excludes fluctuations in food and fuel prices, rose to 3.2% in March from 2.9% in February and 2.2% last year. This was the fastest primary print in two years or from 3.4% in March 2024.
The purchasing power of the peso, or the value of each P1, also fell to an all-time low of 75 centavos in March.
This means that P100 in 2018 can now only buy P75 worth of goods and services.
The PSA data also showed that inflation for the bottom 30% of income families rose to 4.2% from 2.5% in February and 1.1% last year.
In the National Capital Region (NCR), inflation also increased to 3.6% in March from 1.9% in February and 2.1% last year.
Excluding NCR, consumer prices rose to 4.2% in March from 2.5% in February and 1.8% last year.
With inflation rising faster than expected, analysts say the case for tightening the BSP’s monetary policy may now be stronger.
March was the first time in more than a year or since February 2025 that the central bank’s forecast missed the actual print of inflation.
For Aris D. Dacanay, ASEAN economist at HSBC Global Investment Research, the breach of last month’s target calls for an increase in the policy rate to 4.5% at the upcoming Monetary Board meeting on April 23.
He mentioned that they expect the Bank to do its duty to stabilize prices and deal with the possible effects of the oil shock. as growth is still muted.
“Although uncertainty affects the direction of global commodity prices, we think it is important to be ahead of the curve, especially with the risk of oil prices tilting upwards,” said Mr. Dacanay in a report on Tuesday.
“Of course, growth was already weak before the oil shock hit, and the central bank may decide to ‘look beyond’ the supply shock.” But given the BSP’s primary mandate of price stability, we expect the BSP to, at the very least, mitigate the potential impacts of the oil spill on non-energy costs,” he added.
Last month, the central bank left its key rate unchanged at 4.25% in an external meeting, a move BSP Governor Eli M. Remolona, Jr. he said he intends to calm the markets shaken by the war in the Middle East.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort also sees the BSP raising rates later this year to bring inflation back to its target range as he expects consumer prices to rise sharply as the war drags on.
“(Inflation in March was) already above the BSP’s target range of 2%-4% which would lead to an increase/rates to bring inflation back to the target range in order to achieve the mandate of price stability (and) better manage both inflation and inflation expectations despite the fact that the majority of the case is driven by supply and environmental factors beyond the country’s control,” he said in a Viber message.
Chinabank Research said that inflationary pressures may continue until the end of the year but sees the central bank on hold for now.
“Price pressures are likely to continue throughout the year, and second-round results are expected in food and utility activities,” a separate note said. “We expect the BSP to hold rates at its meeting this month as inflation remains largely subdued without evidence of excess demand.”
