Plunging oil costs, price freeze to slow inflation in March
This March 26, 2020 photo shows Farmers Market in Cubao, Quezon City.
The STAR/Boy Santos
Plunging oil costs, price freeze to slow inflation in March
Prinz Magtulis ( - March 31, 2020 - 9:17am

MANILA, Philippines — Declining oil prices likely slowed inflation in March, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said Tuesday.

The central bank’s Department of Economic Research projects consumer prices rose 2.4% this month, slower than the 2.6% notched in February and settling within the low-end of BSP’s annual 2-4% target.

Even if the on-point projection is not hit, Diokno said inflation may settle anywhere within 2 to 2.8% range this month.

“The downward adjustment in prices for March was largely due to the plunging world oil prices,” Diokno said in a series of tweets.

Dwindling demand due to the coronavirus impact on economic activity pulled down Dubai crude prices— the Asian benchmark for global oil prices— to $22.51 per barrel, a level not seen since 2016.

Since the Philippines imports around 80% of its oil needs a year, plunging global oil prices help lower import costs for oil firms, which in turn prompt them to lower retail prices.

Apart from oil which serves as a crucial raw material from transport to factory activity, Diokno said food prices have also remained steady despite reports of shortage in some areas affected by the month-long Luzon community quarantine.

“In addition, food prices remained stable due to ample supply and favourable weather, and in the second half of March, the price freeze imposed by government on basic commodities,” the BSP chief said.

Decelerating inflation is giving BSP more leeway to ease policy and pump more cash to the economy, a decision it already made several times over the pst two weeks as the government scrambled to raise fund for coronavirus disease-2019 (COVID-19) response.

Apart from slashing key rates by 50 basis points last March 19, BSP also purchased P300 billion in Treasury bonds from the government on Monday, with no interest charged on the papers.

Diokno, with blessing from his colleagues at the policymaking Monetary Board, also cut bank reserve requirements by 200 bps starting March 30 to free up around P200 billion for lending.

As It Happens
LATEST UPDATE: September 4, 2020 - 9:08am

The growth of prices of goods and services peaked at 6.7 percent in August this year—the highest inflation rate in nine years.

Metro Manila also suffered from staggering 7-percent inflation last month, forcing Filipino consumers to tighten belts even further.

Inflation has continuously climbed for eight straight months since January this year as President Rodrigo Duterte signed the TRAIN law, or the Tax Reform for Acceleration and Inclusion.

The Philippines' inflation rate is the highest in Southeast Asia. The inflation rate breached economic managers' earlier hoped-for ceiling of 4 percent.

September 4, 2020 - 9:08am

Headline inflation slows for the first time in three months to 2.4% in August, the Philippine Statistics Authority announces Friday.

The PSA says this was a result of a 2.5% year-to-date average inflation for 2020.

August 5, 2020 - 9:10am

Headline inflation quickens to 2.7% in July, the Philippine Statistics Authority announces Wednesday.

This was a result of a 2.5% year-to-date average inflation for 2020. The PSA also says the reason for the increase in July inflation was the faster movement of transportation prices.



July 7, 2020 - 9:06am

Headline inflation, as measured by consumer price index, accelerates to 2.5% year-on-year, the first time it gained pace this year.

Bangko Sentral ng Pilipinas earlier projected inflation to fall between 1.2% to 2.7%.

May 5, 2020 - 9:25am

Headline inflation eases to 2.2% in April, the first month of the enhanced community quarantine in several areas due to the COVID-19 pandemic.

According to the Philippine Statistics Authority, the year-to-date inflation for this year slowed down to 2.6%, which is lower than April 2019's inflation at 3.0%.

The latest inflation rate is the slowest in five months since last November's 1.3%.



January 7, 2020 - 9:10am

Headline inflation increased by 2.5% in December 2019, the Philippine Statistics Authority says in a briefing. 

"This brings the annual average inflation for 2019 to 2.5%," it also says.

Headline inflation rose to 1.3% in November 2019 after bottoming to a 43-month low of 0.8% in October.

The government's target inflation range for 2019 was 2-4%.

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