Inflation Update: The case to tighten

Philippine consumer prices rose in March at its fastest pace since 2024.

This strengthens the case for monetary authorities to raise policy interest rates to help cool inflation expectations.

Key points

• Headline inflation accelerated to 4.1% year-on-year in March from 2.4% in February, above the 3.8% median estimate in a Bloomberg survey and the Bangko Sentral ng Pilipinas (BSP)’s 3.1-3.9% forecast for the month.
• This brings year-to-date average inflation to 2.8%, still within the BSP’s 3±1% target band.
• Core inflation, which excludes volatile food and energy items, slightly quickened its pace to 3.2% in March.
• The recent uptick in inflation was primarily driven by higher transport costs, due to faster inflation of gasoline and diesel brought about by the US-Iran crisis.
• Additional upward