Inflation in the Philippines likely accelerated for the second consecutive month in March, primarily due to high rice prices. This has led analysts to predict that the Bangko Sentral ng Pilipinas (BSP) will maintain its current borrowing costs at the upcoming policy review in April.
Finance Secretary and Monetary Board member Ralph Recto cautioned that inflation is expected to remain volatile and could potentially surpass the central bank’s target range of two to four percent. Economist Makoto Tsuchiya of Oxford Economics forecasted that headline inflation could increase to 3.5 percent in March, citing unfavorable base effects and the possibility of higher food prices, particularly rice and meat.
BSP Governor Eli Remolona Jr. also anticipated inflation to rise to 3.9 percent in March, marking the second consecutive month of increase. Despite this, inflation would still be significantly lower than the 7.6 percent recorded last year, and the consumer price index is expected to stay within the central bank’s target range for the fourth straight month.
On the other hand, National Economic and Development Authority Secretary Arsenio Balisacan suggested that inflation might slow down in March, especially with the delay in implementing proposed minimum wage adjustments into law. Both Tsuchiya and Security Bank chief economist Robert Dan Roces believed that inflation could breach the target range in the second quarter due to various upward pressures.
The BSP Monetary Board’s second policy review for the year has been rescheduled to April 8, and experts like ING Bank Manila senior economist Nicholas Mapa anticipate higher inflation in March. Data from the Philippine Statistics Authority revealed a rise in rice inflation, indicating potential challenges ahead.
Despite the uncertainties, Recto expressed confidence in the BSP’s ability to balance price stability with economic growth. He acknowledged the possibility of rate cuts in the future but suggested they may be less frequent and of smaller magnitude than initially projected. Overall, the bumpy road ahead for inflation signals a cautious approach from policymakers as they navigate through economic challenges.
