The Bangko Sentral ng Pilipinas (BSP) said inflation risks have “significantly” grown after consumer prices rose faster than expected in March amid the oil crisis.
This got here after soaring fuel prices pushed headline inflation to 4.1% last month, well-above than the central bank’s expected 3.1%-3.9% print.
It likewise marked a pointy pick up from the two.4% in February and 1.8% a yr ago, making it the fastest and the primary time that it breached the BSP’s goal since July 2024.
The central bank wants inflation to remain inside 2%-4%, with 3% as its point goal.
“The inflation risk environment has significantly shifted to the upside amid the continued conflict within the Middle East,” it said in a press release released late Tuesday.
The central bank noted that further escalation of oil shocks would later weigh on the costs of other commodities, which can disanchor its inflation expectation.
“A pointy and prolonged oil price shock could trigger spillover effects with the potential broadening of price pressures to the remaining of the CPI basket,” the BSP said. “This might also disanchor inflation expectations and generate further second order impact.”
The BSP had expected inflation to speed up past its goal band by April, with its full-year forecast now at 5.1%.
For now, the central bank said it’s going to proceed to evaluate incoming economic data to find out if it has to take monetary policy motion aligned with its price stability mandate.
The Monetary Board will hold its second policy review this yr on April 23. — Katherine K. Chan