Dismal consumption and a halt in public transportation in Luzon started to temper inflation in March, an unwarranted consequence of businesses getting shuttered and consumers being asked to stay home in the Philippines’ most populous island.
Consumer prices rose 2.5% in March, down from 2.6% in previous month and notching the slowest uptick for the year, the Philippine Statistics Authority (PSA) reported.
The slowdown in price increases appeared to affect various products and services. Excluding volatile oil and food prices, which contribute highly to inflation, core inflation went up a slower 3% in March, down from 3.2% in February.
The Bangko Sentral ng Pilipinas (BSP), which aims to keep prices stable to support the economy, expects further inflation weakness down the road.
Tight quarantine measures to control the spread of coronavirus disease-2019 (COVID-19) dampened demand for goods and services, which in theory, meant sellers are left with no reason to increase prices, BSP said. Data showed prices of heavily-weighted vices alcohol and tobacco rose “slower” by 18% year-on-year.
On the flip side, food and beverage prices accelerated to 2.6% in March, just when news of supply shortages in groceries and markets were reported in the early weeks of the Luzon lockdown. The government said there should be “unhampered” entry of food trucks in checkpoints, but cascading the order proved slow.
With prices slowing down, BSP said its policymaking Monetary Board sees “the balance of risks to inflation outlook now leans toward the downside for both 2020 and 2021.”
That means inflation forecasts of 2.2% for 2020 and 2.4% for 2021 last March 19, the latest policy meeting of BSP, would likely get lowered further. The projections already fall at the low-end of BSP’s two to four-percent target for the year.
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