5-4-2024 (MANILA) In Manila, the Philippine capital, the annual inflation rate surged for the second consecutive month in March, propelled by a sharp rise in rice prices, marking the fastest pace in 15 years. This development has prompted the central bank to maintain its tight policy stance.
According to data released by the statistics agency on Friday, the consumer price index climbed by 3.7 per cent in March compared to the same period last year, up from 3.4 per cent recorded in the previous month.
Economists, anticipating the inflationary trend, had projected a slightly higher rate of 3.8 per cent for March, a forecast well within the central bank’s range of 3.4 per cent to 4.2 per cent for the month.
“The risks to the inflation outlook remain tilted toward the upside,” stated the Bangko Sentral ng Pilipinas (BSP) in a press release, as the Monetary Board gears up to review its policy settings on Monday.
Of particular concern is the inflationary pressure stemming from food prices, which soared to 5.7 per cent in March, marking the highest level since November 2023.
Notably, the price of rice, a staple food in the Philippines, witnessed a dramatic increase of 24.4 per cent in March, the steepest surge since February 2009 when it soared by 24.6 per cent. Rice prices alone accounted for nearly half of the headline inflation for March.
In contrast, core inflation, which excludes volatile food and energy prices, eased slightly to 3.4 per cent in March from 3.6 per cent in February, aligning closely with a Reuters poll forecast of 3.45 per cent.
With these developments, analysts anticipate that the BSP will likely maintain its benchmark interest rate unchanged in the upcoming week. Robert Dan Roces, chief economist at Security Bank in Manila, remarked, “While the headline inflation figure is lower than expected, rising food prices remain a concern.”
In February, the central bank had opted to keep its benchmark rate steady at 6.50 per cent for the third consecutive meeting, signalling its cautious approach amidst evolving inflationary pressures.
