Inflation picks up pace in March

Prices of goods and services went up a notch in March due to higher prices in goods and services, the Philippine Statistics Authority (PSA) reported on Tuesday.

Inflation increased by 1.1 percent last month from 0.9 percent in February and 2.4 percent in the same month last year, slower but still within market expectations and the Bangko Sentral ng Pilipinas forecast of 0.6-1.4 percent.

"The growth was due to higher annual increments noted in the indices of food and non-alcoholic beverages; alcoholic beverages and tobacco; recreation and culture; and restaurant and miscellaneous goods and services," the PSA said.

In a separate statement, the National Economic Development Authority (NEDA) noted food items went up by 1.6 percent in March from 1.5 percent the month prior – mainly due to increases in meat (1.2 percent from 0.9 percent), fish (2.8 percent from 2.3 percent), milk, cheese, and eggs (1.2 percent from 1.1 percent).

Despite the El Niño, rice prices remain lower than the previous year (-1.7 percent in March from -2.0 percent in February) and continue to decline since October 2015, Socioeconomic Planning chief Emmanuel Esguerra noted.

“Aware of El Niño, government has put in place a program to mitigate the impact of drought. We need to ensure adequate supply of food and provide assistance to affected farmers,” Esguerra said.

Vegetable prices declined by 2.9 percent in March with a total decline of 7.8 percent since spiking in January.

Factors

“We have been closely monitoring price movements and looking at factors that influence commodity prices, especially food consumed by the poor,” Esguerra said.

Domestic oil prices also went up last month, marked by cutbacks in production and exploration of international energy firms brought by low oil prices in the global market.

Diesel reflected the highest increase of 8.6 percent in March, followed by kerosene (7.06 percent), gasoline (5.03 percent), and liquefied petroleum gas (0.58 percent).

“Outlook for oil prices in the medium-term remains modest, given a backdrop of strong world crude oil supply growth and weak global demand. Overall, the continuing environment of low international oil prices remains a positive development for the country, considering that we are a net importer of oil,” Esguerra said.

“In the first three months of 2016, inflation remained relatively low and stable in line with expectations over the policy horizon, which is likely to support consumption growth,” Esguerra said.

Esguerra noted that the government needs to stay vigilant about the onslaught of the dry season on food prices even if El Niño is on the wane.

“Although El Niño has entered its weakening stage, the risk of higher food prices remains given the onset of the summer season. Thus, we must also monitor our rice supply and importation to avoid supply disruptions which could result in volatilities in the price of rice,” Esguerra said. – Joseph Tristan Roxas/Jon Viktor Cabuenas/VDS, GMA News