“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 BSP said in a statement.
HIGHER OIL AND fuel prices caused by the Middle East conflict are seen pushing the country’s inflation rate to between 3.1 to 3.9 percent in March, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.
The projected range is higher than February’s 2.4-percent inflation. The year-to-date inflation rate has settled at
2.2 percent.
“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 BSP said in a statement Tuesday.
However, the BSP observed that while fuel prices have increased dramatically, with diesel now in the P110 to P130 per liter level, the price of food products have yet to go up. As of the latest, diesel prices increased by up to P12.50 per liter.
With that, the central bank noted that “the anticipated lower prices of vegetables, fish, and meat may help temper inflation, but upside pressures continue to warrant close monitoring.”
The BSP said it also remains watchful of evolving risks and global developments.
“The BSP will remain vigilant and guided by incoming data, specifically on inflation and growth prospects. We will continue to monitor recent developments in the Middle East for their implications on inflation and economic activity,” it said.
The BSP’s latest projection of higher inflation comes after it announced last week it was maintaining key interest rates.
During the off-cycle meeting last week, the BSP, citing the impact of higher oil prices and their spillover effects on commodities and services, raised its inflation outlook for this year.
From an earlier projection of 3.6 percent, the BSP expects inflation this year to accelerate to as much as 5.1 percent—well above the government’s 2 to 4 percent target range.
For next year, inflation is projected to average 3.8 percent, higher than the previous estimate of 3.2 percent.
For his part, BSP Deputy Governor Zeno Abenoja said the previous inflation forecast was based on lower global crude prices for this year and next year.
“Previously, we were looking at around $64 to $65 per barrel. Now, we have updated them. Based on the futures prices, the average international oil prices could hover at around $85 on average for this year. And next year, about $76 per barrel,” he said.
The BSP also factored in higher transport fares, possible electricity rate hikes, rising fertilizer costs, and the temporary suspension of oil excise taxes.
