Economy 2 MIN READ

UPDATE 1-Philippine March CPI jumps, plays down need to act now

April 5, 2022By Reuters

March CPI +4.0% y/y vs +3.0% in Feb, tops market forecast says on guard for “second-round” inflation pressures

Adds comments from central bank governor

By Neil Jerome Morales and Enrico Dela Cruz

Philippine inflation hit the highest level in six months in March, exceeding market forecasts, but while the central bank warned of further price pressures ahead it did not anticipate a need for monetary policy intervention for now.

The Consumer Price Index rose 4.0% last month from a year earlier, faster the 3.7% median forecast in a Reuters poll and near the upper end of the central bank’s projected range of 3.3% to 4.1% for the month.

The Philippine Statistics Authority has yet to release core inflation figures calculated using a new 2018 base year.

Inflation in the first quarter averaged 3.4%, still within the 2%-4% target band of the Bangko Sentral ng Pilipinas (BSP).

A 6.2% increase was recorded in an index for housing, water, electricity, gas, and other fuels, while the heavily-weighted food index rose 2.8%, the statistics agency said.

BSP Governor Benjamin Diokno said driven largely by the surge in global oil prices average inflation could breach the upper end of the target range this year, but was expected to ease back to average 3.6% in 2023.

The BSP remained on guard against possible second-round effects from supply-side pressures, but Diokno played down the prospect of policy intervention at this stage.

“Previous episodes of supply-side shocks in the country have shown that these are best addressed through timely non-monetary policy interventions that could ease directly domestic supply constraints and prevent second-round effects on prices,” he said in a statement.

The BSP has kept its benchmark interest rate PHCBIR=ECI at a record low of 2.0% since November 2020, saying its priority is to support a fragile economic recovery.

The BSP was expected to hike rates by 50 basis points in the last quarter of the year to 2.50%, according to a March 15-21 Reuters poll of economists. But a significant minority had pencilled in a hike in the third quarter. nL3N2VL3OA

(Reporting by Neil Jerome Morales and Enrico Dela Cruz
Editing by Ed Davies)


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