March inflation drops to 7.6 percent

Headline inflation dropped to 7.6 percent year-on-year in March from 8.6 percent in February.

This was within the Bangko Sentral ng Pilipinas’s (BSP) forecast range of 7.4-8.2 percent for the month. The resulting year-to-date average of 8.3 percent is above the Government’s average inflation target range of 2.0-4.0 percent for the year.

In contrast, core inflation, which excludes selected volatile food and energy items to depict underlying demand-side price pressures, rose further to 8.0 percent in March from 7.8 percent in February. On a month-on-month seasonally adjusted basis, inflation was nil in March from 0.3 percent in the previous month.

Headline inflation declined due largely to lower inflation for food and energy-related items in the CPI basket.

Inflation for food items eased during the month with improvements in the domestic supply of key food commodities, particularly for vegetables, meat, and sugar.

Likewise, transport inflation decelerated further in March, reflecting the rollbacks in petroleum pump prices following the decline in global crude oil prices. Similarly, inflation for electricity, gas, and other fuels also fell during the month.

The latest inflation figure remains consistent with the BSP’s assessment that inflation will remain elevated in the near term but gradually revert towards the target range in end-2023.

Nevertheless, the risks to the inflation outlook continue to lean towards the upside for both 2023 and 2024.

Going forward, therefore, the BSP remains vigilant against inflation risks over the policy horizon and is prepared to adjust its monetary policy settings as needed in line with its price stability mandate.