Headline inflation rose to 4.4 percent year-on-year in March from 4.2 percent in a month earlier. This compares favorably with inflation of 6.4 percent in March 2009. The resulting year-to-date average of 4.2 percent is well within the Government’s target range of 3.5-5.5 percent for 2010. Core inflation, which excludes some food and energy items to measure generalized price pressures, was also higher at 3.9 percent from 3.6 percent in the previous month. However, month-on-month headline inflation was lower in March at 0.2 percent from 0.4 percent in February.
The uptick in inflation was due mainly to the increase in the inflation rates of light as a result of higher electricity power rates as the ongoing El Niño phenomenon led to higher generation costs. Price hikes were also observed in transportation and communication services, with the higher pump prices of petroleum products in March. Meanwhile, year-on-year food inflation decelerated to 3.1 percent in March from 3.8 percent in February as the prices of rice, dairy products, fish and other food products dropped and as corn prices contracted amid ample supply.
Governor Amando M. Tetangco, Jr. noted that the March inflation reading was within the 3.9-4.8 percent forecast range of the BSP for the month, which was also consistent with the latest assessment of inflation converging within the target-consistent path over the BSP monetary policy horizon of 2010 and 2011. Moving forward, he said that the BSP will continue to carefully monitor and assess emerging risks to the inflation outlook to safeguard price stability and at the same time help sustain the country’s economic recovery.