By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) forecasts a low 3.1 percent inflation for March with stable rice supply, but the rate could still hit a high of 3.9 percent due to higher oil prices.
The BSP Department of Research sees a 3.1-3.9 percent range for possible March inflation, the first time in more than a year that it announced an inflation forecast below four percent, which was still the high end of the 2-4 percent target for this year. In February, actual inflation slipped to 3.8 percent from 4.4 percent in January, for a year-to-date average of 4.1 percent.
“(The) higher domestic oil prices and upward adjustment in electricity rates provide upside price pressures to inflation for the month,” said the BSP. “These may be partly offset by lower prices of rice and other agricultural commodities due to the arrival of imports.”
The Monetary Board, in its second policy meeting this year, maintained current rates in view of a more stable inflation expectation and tempered price pressures such as lower food prices because of sufficient food supply.
The BSP has lowered the entire 2019 inflation forecast to three percent as of March 21, from the previous estimate of 3.1 percent announced last February 7. The 2020 inflation forecast is also three percent.
BSP Deputy Governor Diwa C. Guinigundo said the risks to inflation continue to be broadly balanced but further risks from a possible prolonged EI Niño and higher-than-expected increases in global oil and food prices could arise.
He commented, however, that they are “out of the woods” with a three percent inflation outlook for 2020 which means inflation will continue to decline this year. “It will stabilize (at three percent),” he said.
Guinigundo reiterated that a low and stable inflation could be seen in the third to the last quarter of 2019, when the comparable figures would be the 2018 inflation highs of 6.7 percent for September and October. He said the negative base effects will have “dissipated” in the last two quarters of the year.