Bangko Sentral: March inflation seen to reach 5 percent

Inflation will likely accelerate to as high as 5 percent in March as prices of oil and food in the international market continue to surge, the Bangko Sentral ng Pilipinas said Friday. “Volatility in the international price of oil and increases in domestic prices of food products may have offset the price-dampening effect of peso appreciation," said BSP Gov. Amando Tetangco Jr. March inflation may range from as low as 4 percent to as high as 5 percent, according to him. “The BSP’s move [on Thursday] had already taken into consideration this expected uptrend in inflation in the near term," Tetangco said. The move pertained to the central bank’s decision to tighten the monetary policy by raising 25 basis points in key rates — the first increase since July 2009. Tetangco said the move was preemptive and meant “to ensure inflation expectations remain anchored." Both the central bank and analysts now agree that inflation would average “higher than original forecast of 4.4 percent" during the year. The BSP, however, does not want to put number to it. BSP Deputy Gov. Diwa Guinigundo announced the higher forecast inflation for this year in the wake of three wage hike petitions filed by labor groups, including the P75-per-day adjustment sought by the Trade Union Congress of the Philippines. This was separate from another petition for fare rate increases by transport groups, Guinigundo added. Nevertheless, Tetangco said that while the immediate outlook was for inflation to range higher, the full year rate would likely be “closer to the lower end of our target range" of 3-5 percent. — JE, GMA News