Philippine inflation seen easing for fifth straight month in March: Reuters poll

A vendor rests in her market stand that sells rice in Quezon City
A vendor rests in her market stand that sells rice in Quezon City, Metro Manila in Philippines, September 5, 2018. REUTERS/Eloisa Lopez

April 1, 2019

MANILA (Reuters) – Philippine annual inflation likely slowed for a fifth straight month in March due largely to easing food prices, a Reuters poll showed.

The consumer price index is forecast to have risen 3.5 percent in March from a year earlier, according to the poll of 10 analysts, below the previous month’s 3.8 percent and the lowest since January 2018.

If the forecast turns out to be correct, the March print will mark the second consecutive month that inflation has stayed below the top end of the central bank’s 2-4 percent target for this year.

“Food prices would remain to be the major catalyst for the continuous easing trend in inflation, even for the coming months,” said Michael Ricafort, an economist at Rizal Commercial Banking Corp.

The implementation of a new law lifting a two-decade-old cap on rice imports is also expected to cool inflation further as food prices account for about 35 percent of the consumer price basket, Ricafort said.

A more manageable outlook for inflation this year has led many analysts to believe the central bank would reverse some of last year’s policy tightening to support economic growth.

The median forecast for 2019 average inflation in the poll was 3.2 percent, slightly higher than the central bank’s 3.0 percent target.

The Philippines remains one of Asia’s fastest growing economies, but policymakers had to grapple with soaring inflation last year that pushed the central bank to raise its benchmark rate by a total 175 basis points to 4.75 percent.

(Reporting by Karen Lema; Editing by Gopakumar Warrier)

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