HIGHER local fuel and electricity costs due to the Middle East conflict, along with a weaker peso, could have pushed inflation to a 20-month high in March, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.
Consumer price growth was forecast to have hit 3.1 to 3.9 percent, still within the 2.0- to 4.0-percent target but higher than the 2.4 percent recorded in January.
Inflation at the top end, if realized, would be the highest since July 2024’s 4.4 percent.
Data for March will be released by the Philippine Statistics Authority on April 7.
“Inflation risks have intensified with upward price pressures arising from the significant increase in domestic petroleum prices, higher rice prices, increased electricity charges in Meralco-serviced areas, and depreciation of the peso,” the central bank said in a statement.
“The anticipated lower prices of vegetables, fish, and meat may help temper inflation, but upside pressures continue to warrant close monitoring,” it added.
The Monetary Board, during an off-cycle meeting last Thursday, raised its inflation projection for this year and next year to 5.1 percent and 3.8 percent, respectively, from 3.6 percent and 3.2 percent previously.
Following the meeting, BSP Deputy Governor Zeno Ronald Abenoja said the impact of higher oil prices could be felt more strongly in the second half of the year and push inflation higher.
Inflation is expected to rise further in April, potentially reaching as much as 5.0 percent.
“The BSP will remain vigilant and guided by incoming data, specifically on inflation and growth prospects,” the central bank said on Tuesday.
“We will continue to monitor recent developments in the Middle East for their implications on inflation and economic activity.”
The Monetary Board has decided to keep key interest rates unchanged at 4.25 percent ahead of an April 23 meeting, citing economic uncertainties and hinting of further off-cycle actions.
Analysts are mixed about the central bank’s next policy move, with some expecting a rate hike in response to weakening economic growth and others saying a continued pause was more likely.
Last week, the BSP said that with upside inflation risks largely supply-driven, “monetary policy has limited effectiveness.”
Raising interest rates at this time, it added, “would delay the [economy’s] recovery.”