John Matthew Cruz
Headline inflation may settle between 3 percent and 3.8 percent this month, the central bank said, citing pressure from higher electricity rates in areas serviced by the Manila Electric Co. (Meralco).
The latest forecast by the Bangko Sentral ng Pilipinas (BSP) compares with 1.1 percent a year in March 2015 and with 3.3 percent in February this year, the fastest since November 2014, when inflation registered at 3.7 percent.
Downward price pressures would come from lower fuel and food prices, the central bank said on Monday. The March inflation data is scheduled to be released by the Philippine Statistics Authority on April 5, Wednesday.
“The higher power rates in Meralco-serviced areas due to the Malampaya maintenance shutdown along with the weaker peso could be partially offset by the decline in fuel and food prices this month,” BSP Governor Amando Tetangco Jr. said in a text message to reporters on Monday.
Distribution utility Meralco earlier said the March electric bill for a typical household would increase by P0.66 per kilowatt-hour (kWh), bringing the overall rate to P9.67 per kWh from P9 per kWh in February.
In other words, a P132 increase in the total bill of a typical household consuming 200 kWh a month.
Oil companies implemented three oil price rollbacks during the month ranging from 10 centavos to P1.10 per liter of diesel; 35 centavos to 80 centavos per liter of gasoline; and 20 centavos to P1.20 per liter of kerosene. The BSP forecasts 2017 inflation to average 3.4 percent, or within the government’s 2 percent to 4 percent target.
The central bank has said it will remain watchful of economic and financial developments that could affect the inflation outlook, in line with its commitment to price stability that is conducive to a balanced and sustainable growth of the economy.
At its meeting last week, the policy-setting Monetary Board said the balance of risks surrounding the inflation outlook continues to lean toward the upside, given the transitory impact of the proposed tax reform program, as well as possible adjustments in transportation fares and electricity rates.
The board also cited the beneficial impact on inflation when the quantitative restrictions on rice importation are removed in July.
The lingering uncertainty over prospects of the global economy, due in part to possible shifts in macroeconomic policies in advanced economies, continues to pose a key downside risk to the inflation outlook, it added.