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.

• 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 pressure came from higher prices of food and non‑alcoholic beverages, as well as increased utility and rental costs.

• Above‑target inflation strengthens the case for tightening with a potential hike this month. The PHP is expected to stay pressured despite potential BSP action.
• Meanwhile, no major moves were seen in local government bond yields despite the higher-than-expected inflation data, though this could put some near-term downward pressure on local equities.

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