Rising concerns: El Niño, rice prices may drive March inflation to 4.2%, BSP warns

The Bangko Sentral ng Pilipinas (BSP) released its delayed March inflation forecast, predicting a range of 3.4% to 4.2%.

This potential increase from February’s 3.4% inflation comes amid concerns about rising prices for key commodities.

Rice and meat prices remain elevated, exerting upward pressure on inflation. Higher domestic fuel prices and electricity rates contribute to costlier goods and services.

Lower prices for fruits, vegetables, and fish could offer some relief. The relatively strong peso, hovering around P55 to the dollar, helps mitigate imported inflation.

The BSP reiterated its commitment to data-driven monetary policy and will continue monitoring price trends. The central bank’s next policy meeting, originally scheduled for April 4, is now set for April 8 to align with the release of the April 5 inflation report.

BSP Governor Felipe Remolona Jr. emphasized the importance of monitoring rice prices due to their potential impact on inflation expectations and the ongoing El Niño dry season.

The El Niño phenomenon may cause agricultural production issues, potentially pushing inflation above the target range in the second quarter.

As of February’s policy meeting, the BSP’s risk-adjusted inflation forecast is 3.9% for 2024 and 3.5% for 2025.

Global rice prices have increased due to El Niño’s impact on major rice-exporting countries like Thailand, further aggravated by India’s export restrictions.

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