Inflation seen easing to 3.1%-3.9% range

MANILA, Philippines — Inflation may have eased further to a range of 3.1 to 3.9 percent this month due to lower prices of food items, the Bangko Sentral ng Pilipinas (BSP) said Friday.

In a statement, the BSP’s Department of Economic Research (DER) said the lower end of this projection was slower than the February inflation figure of 3.8 percent.

The projected range likewise falls within the central bank’s two to four percent target.

According to BSP’s economists, higher domestic oil prices and the upward adjustment in electricity rates may have provided upward price pressures to inflation for March.

“These may be partly offset by lower prices of rice and other agricultural commodities due to the arrival of imports,” the DER added.

Going forward, the central bank said it would continue to closely monitor inflation dynamics and ensure that monetary policy remains appropriate to support the BSP’s price stability objectives.

Inflation slowed to an 11-month low of 3.8 percent in February, easing within the BSP’s target of two to four percent. This brought average inflation to 4.1 percent in the first two months.

Based on its latest assessment, the BSP slashed its inflation forecast to 3.1 percent for 2019 from the original assumption of 3.2 percent, while projection for 2020 was retained at three percent.

BSP Governor Benjamin Diokno earlier said there is room for the central bank to ease monetary policy.

 The BSP earlier expected inflation to decline by 0.6 percentage point this year and 0.3 to 0.4 percentage point by next year, due to the implementation of Republic Act 11203 or the Rice Tariffication Law.

The law was signed by President Duterte in February, and became effective on March 5.

It seeks to liberalize the importation of rice into the country by removing the quantitative restrictions on rice imports, in favor of imposing tariffs.