MANILA, Philippines (Updated 10:41 a.m.) — Consumer price growth in the Philippines continued to ease in March to post its slowest pace in 15 months on the back of softer pick up in food prices, the country’s statistics agency reported Friday, giving the central bank more space to tweak monetary policy settings.
Data from the Philippine Statistics Authority showed inflation decelerated to 3.3% in March, slower than 3.8% chalked up in February and 4.3% posted a year ago.
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The latest reading — which marked the fifth straight month that soaring prices cooled down — was the lowest inflation rate since January 2018, the PSA said.
Year-to-date, inflation averaged 3.8% — settling within the state’s 2%-4% annual target.
"The downtrend was primarily due to slower annual increase in the index of the heavily-weighted food and non-alcoholic beverages at 3.4%," the PSA said.
The Bangko Sentral ng Pilipinas tightened monetary policy by a cumulative 175 basis points to 4.75 percent last year after inflation hit a near-decade high in September and October. Soaring prices have eased since then.
New BSP Governor Benjamin Diokno — who is widely seen by the market as a dovish, or one who plays down the effects of inflation, central bank chief — recently said there is room to loosen monetary policy, but stressed that the timing and magnitude of any actions would be “data dependent.”
Diokno also said possible cuts in required reserves imposed on banks may happen “in the next four quarters,” pointing out that the Philippines’ reserve requirement ratio “is very high.”
Last month, the US Federal Reserve sent a strong signal the US economy is slowing, indicating it will not raise its benchmark lending rate again this year.
In an April 4 report by Bloomberg, Deputy Governor Diwa Guinigundo said monetary authorities may start discussing rate cuts when inflation softens to 3%.
“You don’t risk generating the pressures on inflation by either reducing the reserve requirement or bringing down the policy rate immediately,” Guinigundo was quoted as saying by Bloomberg. “If the trend continues, then it’s only after that that one talks about monetary space or the flexibility to bring down the policy rates.”