UNFAVORABLE base effects coupled with a surge in fuel prices could have boosted inflation to near the upper end of the Bangko Sentral ng Pilipinas’ (BSP) target, analysts said.
The median forecast in a Manila Times poll was 3.7 percent, markedly higher than the 2.4 percent recorded in February but within the BSP’s estimate of 3.1 to 3.9 percent for the month.
If realized, inflation will have risen for a fourth straight month but remain within the 2.0- to 4.0-percent goal.
Data for March will be released by the Philippine Statistics Authority this Tuesday, April 7.
Fuel pressures
With the lowest forecast of 3.1 percent, Moody’s Analytics economist Sarah Tan said that higher petroleum and electricity prices, driven by the Middle East conflict, were adding significant upward pressure.
“Food prices are also likely to strengthen on a year-earlier basis, as a price cap on pork and lower rice tariffs kept inflation subdued last year,” she added, which could push average inflation to around 3.1 percent this year.
Chinabank chief economist Domini Velasquez also said the likely acceleration, which she expects to have hit 3.5 percent, would have been driven by faster price increases in non-food items, particularly fuel due to the Middle East conflict, as well as cooking gas and higher electricity charges in Meralco-serviced areas.
“Meanwhile, movements in prices of key food items were mixed: rice, fruits, and cooking oil were up, while declines were seen in vegetable, meat, and fish,” she added, with core inflation likely to have also picked up to 3.1 percent from 2.9 percent.
“Looking ahead, inflation will likely breach the BSP’s 3±1 percent tolerance band starting next month, especially if the conflict in the Middle East becomes persistent and elevated fuel costs would spill over into higher electricity rates and transport fares.”
Philippine National Bank economist Alvin Arogo and Rizal Commercial Banking Corp. chief economist Michael Ricafort also said higher crude prices could push inflation up to 3.7 percent.
“We forecast that inflation quickened in March mainly due to the spike in oil prices,” Arogo said, noting that this was a revision from an initial forecast of 3.1 percent as the “increase in the pump prices of diesel and gasoline overshot the rise in the cost of Dubai crude.”
Ricafort said inflation was likely to go up further and could “potentially breach” the BSP’s target as high oil prices drive up fares, wages and the cost of other goods and services, “creating second-round effects that push actual inflation and inflation expectations higher.”
Already breached
Meanwhile, Union Bank of the Philippines chief economist Ruben Carlo Asuncion said the 2.0- to 4.0-percent goal was likely already exceeded, with unfavorable base effects and higher food prices driving inflation to 4.2 percent last month.
“Transport and utility costs also likely contributed following recent movements in global oil prices, while core inflation remains relatively stable for now,” he said.
“However, the persistence of supply‑side pressures raises the risk of second‑round effects, particularly through higher transport fares, electricity costs, and wage‑related adjustments.”
Asuncion said the inflation outlook may support a more cautious, risk‑management approach with regard to monetary policy, with the BSP likely focusing on anchoring inflation expectations.
This could mean “a prolonged hold — and potentially tighter policy — should upside risks continue to materialize,” he added.
Security Bank Corp. chief economist Angelo Taningco also said that inflation may have exceeded the target at 4.4 percent, mainly due to sharp increases in local diesel and gasoline prices, higher transport costs, and rising electricity rates.
He added that price hikes in various food items such as rice, fish, vegetables and fruits, and a significant peso depreciation could have added to the pressure.
The central bank last week said that inflation risks had “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 Monetary Board, during an off-cycle meeting last month, 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.
