The Philippines recorded a faster-than-expected rise in annual inflation for March, with headline consumer price growth climbing to 4.1% from a year earlier. That figure is markedly higher than February's 2.4% and exceeds the 3.7% median forecast in a Reuters poll. It is the highest headline reading since July 2024, when inflation registered 4.4%.
On a month-on-month basis, prices rose 1.4% in March - the strongest monthly gain since January 2023 - underlining a pronounced pick-up in price pressures during the month.
In a statement, the Bangko Sentral ng Pilipinas said it will be watchful of incoming data "to assess the need for action" when policymakers convene on April 23 to review interest rates. The central bank added that "mounting risks to the inflation outlook require sustained vigilance."
Transport costs were the main contributor to the March inflation surge, driven by higher global energy prices. Diesel prices jumped 59.5% on a year-ago basis, while gasoline rose 27.3% - the fastest gains for those fuels since September 2022, a period when global energy markets were disrupted by Russia's invasion of Ukraine. By contrast, diesel and gasoline had shown year-on-year declines in February of 1.3% and 5.7%, respectively.
The transport index as a whole increased 9.9% year on year in March, the most rapid pace since January 2023 when the index surged 11.1%.
The Philippines' reliance on oil supplies from the Middle East leaves the country exposed to supply shocks and price volatility when geopolitical tensions escalate, a structural vulnerability noted in the data.
Core inflation, which strips out food and energy components, also edged up to 3.2% in March from 2.9% in February, suggesting the emergence of some second-round inflation effects beyond direct fuel price movements.
The central bank had earlier projected inflation to fall within a 3.1% to 3.9% range for March. Facing rising upside risks to prices, the Bangko Sentral ng Pilipinas kept its key policy rate unchanged at 4.25% at a surprise off-cycle meeting on March 26 and indicated that policy attention would focus on the second-round consequences of global oil price shocks.
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