March inflation likely hit as fast as 4.6% —BSP

Inflation is seen to further accelerate in March and hit as fast as 4.6 percent on the back of higher fuel and electricity prices and weaker peso, according to the latest forecast of the Bangko Sentral  ng Pilipinas (BSP).

“The BSP Department of Economic Research (DER) projects the 2012-based March 2018 inflation to settle within the 3.8 – 4.6 percent range,” the central bank said.

The BSP said the March inflation forecast was revised upward after "incorporating all recent developments and information that could affect price dynamics, including the actual February inflation rate."

Inflation, or the rate of increase in the prices of goods and services, hit its fastest pace in over three years at 4.5 percent — based on 2006 prices. 

Using 2012 prices, however, February inflation picked up at 3.9 percent - still the highest in over three years when inflation clocked in at 4.2 percent in August 2014.

“Adjustments in electricity rates owing to increased power generation charges as well as higher prices of domestic petroleum products, reflecting recent depreciation of the peso, are expected to contribute to upside price pressures,” the central bank said.

Manila Electric Co., the country's largest power distributor, implemented an electricity rate hike of P0.97 per kilowatt-hour in March. 

Higher excise tax rates on petroleum products under the recently-enacted tax reform law put inflationary pressure on fuel prices.

The local currency was trading over P52:$1-level, its lowest in 11 years.

"There were also observed higher rice prices during the month," the BSP said.

The central bank said the upside price pressures could be partly offset by lower liquefied petroleum gas (LPG) prices.

"Going forward, the BSP will continue to monitor closely evolving price conditions over the policy horizon against any signs of incipient prices pressures, and stands ready to take appropriate measures as necessary to ensure that the monetary policy stance continues to support BSP's price stability objectives," the BSP said. — MDM, GMA News