Analysts expect inflation to further slow in March

MANILA, Philippines — Inflation likely slowed further in March amid easing food prices and lower transport costs, strengthening the case for the Bangko Sentral ng Pilipinas (BSP) to cut rates as early as April, analysts said.

The Philippine Statistics Authority is set to release the official March inflation data on April 4.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion said inflation may have gone down to 1.8 percent in March from 2.1 percent in February. He estimated that inflation may continue to hit below two percent until June.

“These monthly forecasts suggest looming inflation hovering around the low end of the BSP’s inflation target range of two to four percent,” Asuncion said. “Without a doubt, the inflation forecasts support a rate cut of 25 to 50 basis points sooner than later.”

If realized, March inflation would mark the slowest growth in nearly five years or since the 1.6 percent recorded in May 2020.

Rizal Commercial Banking Corp. chief economist Michael Ricafort expects March inflation to clock in at 1.9 percent. He said better weather conditions, particularly in northern Philippines, improved agricultural output.

Lower importation costs due to a stronger peso also helped temper price pressures.

However, Ricafort noted that meat and pork prices remain elevated due to the lingering effects of African swine fever.

Still, lower inflation strengthens the case for monetary easing, particularly a possible 25-basis-point rate cut on April 10.

ANZ Research, meanwhile, projects a two-percent inflation for March. The research firm expects global rice prices to remain subdued in the near term following India’s decision to lift restrictions on rice exports.

“Annual rice inflation is expected to have eased further in March following a sharp drop in February owing to lower prices globally. Electricity prices were slightly higher over the month while petrol prices eased compared to February,” it said.

ANZ also sees the improving inflation outlook as supportive of a BSP rate cut at its upcoming policy meeting.

Metropolitan Bank & Trust Co. (Metrobank) chief economist Nicholas Mapa said inflation may have been steady at 2.1 percent in March.

He said rice price deflation and slower inflation for vegetables and transport likely put downward pressure on prices. However, elevated meat and pork prices may have tempered the slowdown.

“Another month of subdued inflation gives BSP more than enough reason to finally pull the trigger on a rate cut in April,” Mapa added.

The BSP kept its benchmark interest rate at 5.75 percent in its first policy meeting of the year in February, marking a pause after three consecutive 25-basis-point rate cuts in 2024. The Monetary Board is set to review its policy stance again on April 10.