March inflation seen higher

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said inflation would likely remain elevated at a range of three to 3.8 percent for the month of March due to higher power rates and weaker peso.

BSP Governor Amando Tetangco Jr. said lower fuel and food prices in March were overwhelmed by the increase in power rates in areas serviced by Manila Electric Co. (Meralco).

He also cited the continued weakening of the peso against the dollar amid the normalization of interest rates in the US.

“The higher power rates in Meralco-serviced areas due to the Malampaya maintenance shutdown along with the weaker peso could be partially offset by the decline in fuel and food prices this month,” Tetangco said.

Inflation kicked up to a 27-month high of 3.3 percent in February from 2.7 percent in January due to higher food and oil prices. This brought the average inflation to three percent in the first two months of the year, within the mid point of two to four percent target set by the BSP.

“Moving forward, the BSP will remain watchful of economic and financial developments that could affect the inflation outlook, in line with its commitment to price stability conducive to a balanced and sustainable growth of the economy,” Tetangco said.

Last Thursday, the BSP lowered the inflation forecast to 3.4 percent instead of 3.5 percent for this year and to three percent instead of 3.1 percent for 2018 on lower oil prices and global economic uncertainties.

BSP Deputy Governor Diwa Guinigundo earlier said the lifting of the quantitative restrictions on rice imports would be beneficial to consumers.

He said any entity either individuals, corporates, and cooperatives could import rice upon the payment of the 35 percent tariff.

Guinigundo said revenues from the tariff on imported rice would be funneled back to the agriculture sector to improve productivity.

The BSP official said the impact of the imposition of higher excise tax on fuel products expected at P6 per liter under the Comprehensive Tax Reform Program (CTRP) would be minimized as the implementation would be staggered at P3 per liter on the first year, P2 per liter on the second year, and P1 on the third and final year.

Guinigundo said there is no need to tighten the country’s policy stance as the domestic economy remains robust.

“With the robust domestic economy, there is little need for additional monetary support and stimulus at this point,” he said.

Economic managers penned a gross domestic product (GDP) growth of between 6.5 and 7.5 percent for this year.