By Luisa Maria Jacinta C. Jocson, Reporter
Headline inflation quickened for a second straight month in March as costs of rice continued to surge, the Philippine Statistics Authority (PSA) reported.
Preliminary knowledge from the PSA confirmed the buyer worth index (CPI) accelerated to three.7% 12 months on 12 months in March from 3.4% in February. This was slower than the 7.6% clip in the identical month final 12 months.
Whereas inflation settled inside the Bangko Sentral ng Pilipinas’ (BSP) 3.4-4.2% forecast for the month, it was barely beneath the three.8% median estimate in a BusinessWorld ballot of 17 analysts performed final week.
March marked the fourth straight month that inflation was inside the BSP’s 2-4% goal vary.
Month on month, inflation picked up by 0.1%. Stripping out seasonality components, month-on-month inflation rose by 0.3%.
For the primary quarter, inflation averaged 3.3%. The BSP expects common inflation to settle at 3.6% this 12 months.
Core inflation, which excludes risky costs of meals and gasoline, eased to three.4% in March from 3.6% in February and eight% a 12 months in the past.
“The inflation outturn is in keeping with the BSP expectations that inflation will possible stay inside the goal vary within the first quarter of 2024 due largely to adverse base results,” the BSP stated in an announcement.
“Nevertheless, inflation might briefly speed up above the goal vary within the subsequent two quarters of the 12 months because of the attainable opposed impression of opposed climate situations to home agricultural output and constructive base results,” it added.
Nationwide Statistician Claire Dennis S. Mapa stated March inflation was primarily pushed by the closely weighted index for meals and nonalcoholic drinks, which quickened to five.6% from 4.6% within the earlier month. Nevertheless, it was a lot slower than the 9.3% print in 2023.
Meals inflation rose to five.7% in March, its quickest print in 4 months or for the reason that 5.8% recorded in November 2023. This was additionally sooner than the 4.8% logged in February however slower than the 9.5% within the earlier 12 months.
“Meals inflation shared 55.2% or 2.0 share factors (ppt) to the general inflation in March 2024,” the PSA stated.
HIGH RICE PRICES
Among the many prime meals teams that contributed to meals inflation have been cereals and cereal merchandise and meat and different elements of slaughtered land animals, it added.
Cereal and cereal merchandise, which incorporates rice, quickened to 17.3% in March from 17% within the earlier month and 5.5% in the identical interval in 2023.
Rice inflation climbed to 24.4% in March, from 23.7% in February and a pair of.6% a 12 months in the past. This was additionally its quickest print for the reason that 24.4% in February 2009.
“Since this explicit commodity began rising when it comes to its costs and inflation, our expectation is that it’s going to stay excessive till July,” Mr. Mapa stated.
Rice inflation contributed 1.8 ppt to headline inflation or round 48% of the entire.
For the underside 30% households, the contribution of rice inflation was at 3.7 ppt or nearly 80% of total inflation for the month.
“Simply to present you an thought, the burden of rice in our commodity basket for all incomes is sort of 9%. That’s the best when it comes to weight in our commodity basket. It’s even greater for our backside 30% revenue households, it reaches 17.9%, so near double,” Mr. Mapa stated.
Rice inflation is predicted to stay within the double-digit space over the following few months, he stated.
“Our expectation is that it’s going to truly enhance strongly till round July due to the bottom results, until there may be actually some intervention that may occur within the markets to trigger costs to say no,” Mr. Mapa added.
PSA knowledge confirmed that the common worth of a kilogram of normal milled rice elevated to P51.11 in March from P50.44 a month in the past and P39.90 a 12 months earlier.
Nicely-milled rice rose to P56.44 per kilogram in March from P55.93 in February and P44.23 within the earlier 12 months. Particular rice averaged P64.75 per kilogram in March from P64.42 within the earlier month and P54 a 12 months in the past.
Mr. Mapa additionally attributed sooner rice inflation to elevated world rice costs and better palay (unmilled rice) costs.
“The value of palay is excessive. Our February common is at round P28.29 (per kilogram). This has been rising,” he stated.
“Though in fact, the farmers are fearful in regards to the climate. I feel for the primary quarter, there have been farms that also had excessive manufacturing though there have been additionally farms, particularly these with out entry to irrigation, that’s the place there are issues. However the worth of palay is rising, so that’s one main issue why rice is rising.”
The El Niño climate occasion has precipitated dry spells and droughts in elements of the nation. Agricultural harm attributable to the El Niño has risen to P2.63 billion, with rice being essentially the most affected crop.
“The federal government is intently monitoring climate situations and their results on the provision of key commodities, reminiscent of meals and power, to guard Filipino households from sudden worth will increase,” Nationwide Financial and Improvement Authority (NEDA) Secretary Arsenio M. Balisacan stated in an announcement.
In the meantime, inflation for meat and different elements of slaughtered land animals elevated to 2%. This was sooner than the 0.7% a month in the past however slower than the 4.6% a 12 months earlier.
Mr. Mapa stated that costs of meat, significantly pork, elevated in March.
The common worth of a kilogram of pork shoulder (kasim) rose to P329.52 in March from P315.29 a 12 months in the past. Costs of pork stomach (liempo) elevated to P344.29 per kilo from P327.27 within the earlier 12 months; whereas costs of a kilo of pork meat with bones went as much as P297.30 from P286.49 in 2023.
In the meantime, transport inflation rose to 2.1% in March from 1.2% within the earlier month. Nevertheless, it was slower than the 5.3% a 12 months in the past.
“Month on month, there is a rise within the costs of oil merchandise, gasoline and diesel. There’s actually an impression there. We see that within the enhance of tricycle fares, that’s one of many contributors,” Mr. Mapa stated.
In March alone, pump worth changes stood at a web enhance of P2.30 a liter for gasoline, P0.65 a liter every for diesel and kerosene.
Mr. Mapa famous that the upper tricycle fares was largely felt outdoors of the Nationwide Capital Area (NCR).
Knowledge from the PSA confirmed that the common fare for tricycles outdoors of NCR rose to P17.80 in March from P17.72 in February and P17.50 a 12 months in the past.
In the meantime, the inflation price for the underside 30% of revenue households rose to 4.6% in March from 4.2% within the earlier month. Nevertheless, it was a lot slower than the 8.8% clip within the 12 months in the past.
From January to March, inflation averaged 4.1% for the underside 30%.
Within the NCR, inflation averaged 3.3% in March, sooner than the three.2% a month in the past however slower than the 7.8% recorded in the identical month in 2023.
Inflation outdoors of NCR accelerated to three.8% from 3.5% in February however was slower than the 7.5% within the earlier 12 months.
RISKS TO INFLATION
With the latest uptick in March, the BSP stated that dangers to the inflation outlook stay tilted towards the upside.
“The upside dangers to the inflation outlook might emanate from greater transport costs, greater costs of meals commodities going through provide constraints, elevated electrical energy charges, greater world oil costs, and implementation of a legislated enhance within the minimal wage,” it added.
HSBC economist for ASEAN (Affiliation of Southeast Asian Nations) Aris D. Dacanay stated that inflation could breach the 2-4% goal band within the coming months.
“The numbers are in keeping with our view that headline CPI will finally breach the central financial institution goal within the second quarter of 2024, which can, maybe, lead to some market jitters,” he stated.
“Wanting intently, nonetheless, the rise is usually on account of unfavorable base results. As soon as these base results put on off in August, inflation ought to instantly return to inside the BSP’s goal band,” he added.
Financial institution of the Philippine Islands (BPI) in a commentary stated that El Niño could proceed to stoke inflation.
“Wanting forward, inflation could speed up additional past the 4% goal of the BSP within the second quarter regardless of the lower-than-expected March determine, with El Niño as the principle driver. Provide of sure meals objects will possible stay tight till El Niño subsides,” it stated.
El Niño has proven indicators of weakening however continues to be anticipated to persist till Could, in line with the state climate bureau.
“BSP indicated that it expects inflation to edge previous the higher finish of its 2-4% inflation goal band within the coming months on account of tight provide for agriculture merchandise due to the El Nino induced drought,” ING Financial institution N.V. Manila Senior Economist Nicholas Antonio T. Mapa stated in an e-mail word.
China Financial institution Analysis stated that inflation will stay on an uptrend and breach the goal vary till July, pushed by “unfavorable base results.”
HSBC’s Mr. Dacanay additionally famous that rice costs will even stay a key concern.
“Do not forget that world rice costs steeply rose in August final 12 months. World rice costs are nonetheless elevated however Government Order 50, which prolonged the decrease tariff charges for rice, has stemmed the extent of how a lot home rice costs can surge,” he stated.
With these dangers, analysts stated that the BSP will possible maintain its benchmark price regular at its coverage assessment on April 8 (Monday).
“We consider the BSP could prolong its pause past the upcoming April assembly with a possible price reduce solely possible within the second half of the 12 months,” Mr. Mapa stated.
The Financial Board saved its key price regular at a close to 17-year excessive of 6.5% for a third-straight assembly in February. The BSP hiked borrowing prices by 450 foundation factors (bps) from Could 2022 to October 2023.
“The BSP will possible stay cautious nonetheless, particularly in mild of upside dangers such because the latest rise in world oil costs. We anticipate the BSP to carry its coverage price at its assembly subsequent week, with the fourth quarter of 2024 because the possible begin of financial easing,” China Financial institution Analysis stated.
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