Inflation likely eased in March

MANILA, Philippines — Inflation likely eased further for the second straight month in March amid the steady decline in oil prices as well as the price freeze on basic commodities amid the month-long enhanced community quarantine in Luzon to prevent the spread of the coronavirus disease 2019 or COVID-19, according to the Bangko Sentral ng Pilipinas.

BSP Governor Benjamin Diokno said the Department of Economic Research expects inflation to settle at 2.4 percent in March from 2.6 percent in February.

“The downward adjustment in prices for March was largely due to plunging world oil prices,” he said.

The price of Dubai crude was down to $22.51 per barrel as of March 25 from $85 per barrel in 2018.

Food prices, on the other hand, remained stable due to ample supply and favorable weather.

President Duterte issued Proclamation 922 on March 8 declaring a state of public health emergency due to the rising number of COVID-19 cases as well as the first recorded local transmission in the country.

This prompted the Department of Trade and Industry (DTI) as well as the Department of Agriculture (DA) to impose a price freeze on basic necessities for a period of 60 days pursuant to Republic Act 7581 or the Price Act.

Basic goods that are under the jurisdiction of the DTI include canned fish and other marine products, locally manufactured instant noodles, bottled water, bread, processed milk, coffee, candles, and laundry soap, detergent and salt.

The agriculture department covers basic agricultural goods such as rice, corn, cooking oil, fresh, dried and other marine products, fresh eggs, fresh pork, beef and poultry meat, fresh milk, fresh vegetables, root crops, sugar and fresh fruits.

On the other hand, the BSP said electricity rates in areas serviced by Manila Electric Co. (Meralco) were slightly higher in March.

“Going forward, the BSP will continue to monitor economic and financial developments, and stands ready to implement appropriate policies in support of its primary mandate of price stability conducive to balanced and sustainable economic growth,” the central bank said.

Based on the latest assessment of the Monetary Board, the BSP has lowered its inflation forecast to 2.2 instead of three percent for 2020 and to 2.4 percent for 2021.

“We are optimistic that inflation will continued to be tame,” Diokno said.

The benign inflation environment and slower than expected gross domestic product (GDP) growth have allowed the BSP to slash interest rates by 150 basis points since May last year, almost reversing the tightening cycle that saw rates jump by 175 basis points in 2018 due to inflation breach.