March inflation could exceed BSP target band at 4.51% — Nomura

INFLATION may have accelerated well above the central bank’s target in March due to surging pump prices, electricity rates and the cost of rice, Nomura Global Markets Research said.

In a report, Nomura Global analysts said the consumer price index (CPI) could come in as high as 4.51%, the strongest reading since the 4.9% posted in October 2023.

“We expect CPI inflation to jump to 4.51% year on year in March from 2.42% in February, owing to surging retail fuel prices, combined with higher electricity rates and rice prices,” Nomura Global said.

If realized, this would mark the first time in about two years that the headline indicator breaches the Bangko Sentral ng Pilipinas (BSP) target band, which was last exceeded in July 2024, when inflation came in at 4.4%.

Nomura Global said core inflation, which excludes volatile food and fuel prices, could pick up slightly to 3.2% from 2.9% the previous month due to “some spillovers from higher energy costs.”

Based on the median estimate of 18 analysts polled by BusinessWorld last week, headline inflation is expected to accelerate to a 20-month high of 3.8% in March from 2.4% in February and 1.8% a year earlier.

This is near the upper end of the BSP’s 3.1%-3.9% forecast for the month and would mark the third straight month that inflation settled within the central bank’s 2%-4% target.

This would also bring the three-month inflation average to 2.7%, below the BSP’s revised inflation estimate of 5.1% for the full year and Nomura Global’s 4.4% projection.

The Philippine Statistics Authority will release the March inflation data on Tuesday, April 7.

Philippine fuel prices have risen by double digits weekly since the US and Israel launched attacks on Iran in late February.

In March, fuel retailers hiked pump prices by up to P43.50 a liter for gasoline, P67.35 per liter for diesel and P70.90 per liter for kerosene.

Fuel costs are expected to rise once more this week, with Shell Pilipinas Corp. set to implement a P5.90 per liter increase for gasoline, P19.80 per liter for diesel and P9.10 per liter for kerosene.

Manila Electric Co. also charged 64.27 centavos more per kilowatt-hour (kWh) in March, bringing the electricity rate to P13.8161 per kWh from P13.1734 per kWh the previous month. — Katherine K. Chan