The inflation rate for the month of March is expected to be higher at 3.7 percent from three percent in February, on the back of elevated oil, energy and meat prices, said the Bangko Sentral ng Pilipinas (BSP).

The BSP has a March inflation forecasts ranging from a low of 3.3 percent to a high of 4.1 percent.

BSP Governor Benjamin E. Diokno said on Thursday, March 31, that the weak peso at the P51-level vis-à-vis the US dollar is also one of the primary sources for the price pressures.

“The continued oil price hikes along with high electricity rates in Meralco-serviced areas, higher meat prices, and the peso depreciation are the primary sources of inflationary pressures during the month. These could be offset in part by lower water rates in Maynilad and Manila Water-serviced areas and the decrease in prices of rice, fish and vegetables owing to easing supply constraints,” said Diokno, citing comments from the Department of Economic Research of the central bank.

“The BSP will continue to monitor emerging price developments and possible second-round effects to help achieve its primary mandate of price stability that is conducive to balanced and sustainable economic growth of the economy,” he added.

Durings its March 24 Monetary Board policy meeting, the BSP decided to maintain the benchmark rate at two percent. The policy rate has been kept at two percent since November 2020.

Diokno has said that the decision to keep a low interest rate is to “safeguard the momentum of economic recovery amid increased uncertainty.”

The BSP has also revised higher its 2022 inflation forecast to 4.3 percent from its February 17 estimate of 3.7 percent. For 2023, the BSP also forecasts a higher inflation rate of 3.6 percent from its previous projection of 3.3 percent.

Diokno said the BSP is “keenly aware that inflation is likely to remain elevated in the coming months due mainly to domestic and global supply side pressures. Under these circumstances, it is still best to address these inflationary pressures through direct, non-monetary intervention.”

The BSP said upside risks to inflation have increased in 2022 while for 2023, risks are still broadly balanced. Upside risks come from the shortage in domestic pork and fish supply as well as from the potential impact of higher oil prices on transport fares. Inflation downside risks are mainly COVID-19 infections and emergence of new variants.

To manage price pressures, the BSP continues its support of government implementation of social protection measures to cushion the impact of higher crude oil prices.

The BSP has laid down several anti-inflation measures that it has recommended to the government for its “heavy lifting” since price pressures in this case are better addressed via non-monetary actions.

Diokno also highly encourage the government to continue to open the economy more to increase mobility and expand economic activity to increase aggregate supply for job creation that will lead to increase incomes.