Inflation seen inching up to 1.1% in March

MANILA, Philippines - The Department of Finance (DOF) expect inflation to climb to 1.1 percent in March from 0.9 percent in February due to higher prices of food and beverages.

Finance Undersecretary Gil Beltran said the relatively low inflation rate forecast comes with the lower electricity bill for the month and comparatively lower fuel prices.

Beltran, who is also the DOF’s chief economist, said the rate imposed by Manila Electric Co. (Meralco) for March is about 17 percent lower that of the same month last year.

He added average diesel pump prices, while having bottomed out last January and have shown upward trend since then, are still significantly lower than those of last year.

“Benign inflation will give government elbow room to maintain growth-supportive fiscal and monetary policy and strengthen government capability to combat international market volatility,” he said.

Beltran said inflation for food and non-alcoholic beverages is expected to kick up to 1.7 percent for March from 1.5 percent in February, while that of clothing and footwear would inch up to 1.9 percent from 1.8 percent.

Likewise, inflation for health is expected to increase to 2.1 percent from 1.9 percent, while that of restaurants and miscellaneous services would increase to 1.6 percent from 1.5 percent.

Inflation for transportation would remain at -0.5 percent due to the rollback of transport fares amid the softening of oil prices in the world market.

Earlier, the Bangko Sentral ng Pilipinas (BSP) said March inflation is seen ranging between 0.6 and 1.4 percent for March as cheaper power rates and the strong peso offset the impact of higher oil prices.

BSP Governor Amando Tetangco Jr. said the inflation forecast for March took into consideration lower power rates and the strengthening of the peso against the dollar.

“The downward adjustment in power rates and the recent appreciation of the peso could offset higher domestic oil prices during the month,” Tetangco said.

Inflation slipped to its lowest level in four months, falling one percent at 0.9 percent in February from 1.3 percent in January due to lower food prices and cheaper energy.

This was the lowest since the consumer price index rose to 1.1 percent last November.

“Looking ahead the BSP will remain attentive to evolving price trends to ensure that the monetary policy stance remains consistent with the mandate of preserving price stability conducive to sustained economic growth,” Tetangco said.

The BSP yesterday kept interest rates unchanged for the 12th straight policy-setting meeting since October 2014 due to robust domestic demand and benign inflation.

BSP deputy governor Diwa Guinigundo said the Monetary Board lowered its inflation forecast for this year and next year due to the lower-than-expected inflation last February, the strong US dollar, and the delay in the power rate adjustments.