Inflation slows to 4.5% in March halting five months of acceleration

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Metro Manila (CNN Philippines, April 6) — The increase in prices of basic goods slowed in March after five straight months of speeding up, the Philippine Statistics Authority reported on Tuesday.

Inflation rate settled at 4.5% for the month, slightly lower than the 4.7% in February but quicker than 2.5% a year ago. The figure brings the average inflation rate to 4.5%, National Statistician Dennis Mapa said in a virtual briefing.

Food and non-alcoholic beverages mainly drove the slower increase in prices, logging in 5.8%. This is nearly a point lower than the 6.7% in February. Vegetables, fruits and fish also posted a slower price increase.

Meat prices still posted the quickest pace at 20.9%, slightly up from 20.7% in February.

Transportation, the second commodity group with the biggest share in overall inflation, logged in 13.8%. This was faster than the 10.4% posted the month prior. Tricycle fare led the surge at 47.5%, followed by petroleum and fuels at 11.9% and jeepney fare at 6.3%.

Costs of restaurant and miscellaneous goods and services, meanwhile, rose slower at 3.1%. Meals, personal hygiene articles and barbershop services mainly drove the commodity group's price growth.

Inflation in Metro Manila also slowed to 3.7% from 4.1% in February. Mapa said food and non-alcoholic beverages also drove the milder increase in prices in the region, along with utilities such as housing, water and electricity and household equipment and maintenance.

Areas outside the capital region also saw cooler inflation at 4.7%, slightly down from 4.8% the month prior. Bicol logged the fastest rate among the regions at 8%, and Central Visayas again with the slowest at 1.5%.

Meanwhile, the poorest households or bottom 30% income earners saw prices of basic commodities increase at a similar pace of 5.5%. This brings the average inflation for the group to 5.3%.

Prices of transport, utilities, restaurant and miscellaneous goods and services, and clothing and footwear went up faster for these households, said Mapa. Food and non-alcoholic beverages, alcoholic drinks and tobacco, along with health products logged slower inflation rate while household equipment and maintenance, communication and education costs posted steady growth.

The March overall inflation rate was within the 4.2% to 5% forecast range of the Bangko Sentral ng Pilipinas for the month.

“The overall latest outturn is consistent with expectations that inflation could settle above the high end of the target in 2021, reflecting the impact of supply side constraints on domestic prices of key food commodities, such as meat, as well as the continuing rise in world oil prices,” said BSP Governor Benjamin Diokno in a statement.

He, however, said inflation is expected to return within the target band in 2022 as influences on the supply side subside coupled with timely and effective implementation of direct measures by the government.

Diokno also cited tighter meat supply and improved global economic activity as possible contributors of upward pressures on inflation, while the pandemic keeps posing downside risks to it. The recent spike in COVID-19 cases and hurdles to the vaccination program continue to weigh on domestic demand.

“The Monetary Board is of the view that prevailing monetary policy settings remain appropriate to support the government's broader efforts to facilitate the recovery of the economy,” added the official, who emphasized anew the importance of non-monetary interventions to address the impact of supply side pressures on inflation.