Headline inflation rose to 4.3 percent year-on-year in March from 3.8 percent (revised) in February using the 2012-based Consumer Price Index (CPI) series. The year-to-date average of 3.8 percent using the 2012-based basket was within the Government’s announced inflation target range of 3.0 percent ± 1.0 percentage point for 2018. Meanwhile, on a month-on-month seasonally-adjusted basis, headline inflation was unchanged at 0.6 percent in March from the revised rate in the previous month based on the 2012 CPI series.
Using the 2006-based CPI series, year-on-year headline inflation rose to 4.8 percent in March from 4.5 percent in the previous month. This brought the year-to-date average to 4.4 percent, which is above the Government’s inflation target of 2-4 percent for the year. Meanwhile, core inflation—which excludes certain volatile food and energy items to measure underlying price pressures—increased to 4.7 percent from 4.4 percent in the previous month using the 2006-based CPI series.
Inflation in March rose as the rate of change in the prices of a number of major CPI subcomponents exceeded the upper end of the inflation target. These include food items such as corn, fish, fruits, vegetables, and other food products not elsewhere classified while rice prices also went up due to tight supply in the lean months between harvest seasons. Meanwhile, upward adjustments in electricity rates due to higher power generation charges contributed to higher non-food inflation in March.
The BSP Officer-In-Charge noted that the latest inflation reading remains in line with the BSP’s baseline projections, which show inflation averaging near the high end of the target range in 2018 before decelerating towards the midpoint of the target range in 2019. Nevertheless, the elevated path of inflation in 2018 along with rising inflation expectations require continued careful assessment of signs of potential second-round effects and of broadening inflation drivers. Authorities also continue to prudently evaluate the appropriateness of a measured policy response to help firmly anchor inflation expectations and safeguard the goal of price stability.
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