BSP says inflation even slower in March with cheaper fuel, price freeze due to COVID-19

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Metro Manila (CNN Philippines, March 31) — Prices of basic goods likely saw a more modest increase in March due to cheaper fuel and a price freeze during the coronavirus outbreak, the central bank said Tuesday.

Citing figures from the Bangko Sentral ng Pilipinas Department of Economic Research, Governor Benjamin Diokno said in a tweet that inflation was likely at 2.4 percent for the month, coming from a wider 2-2.8 percent estimate.

Official inflation data will be released April 7. Diokno's forecast would be the slowest rise in prices in four months, and would be slower than the 3.3 percent uptick in March 2019.

"The sharp decline in the prices of petroleum products due to the significant fall in global crude oil prices contributed to the downward price pressures for the month," the BSP said in a statement.

Consumers enjoyed a series of big-time rollbacks in retail pump prices during the month due to a global supply glut, sending the benchmark Dubai crude prices falling to multi-year lows.

READ: Oil crashes to fresh 18-year low as demand suffers unprecedented drop

For food prices, ample supply and good weather conditions helped keep costs stable, which was eventually sealed by a two-month price freeze that forced establishments to sell essential goods at their March 8 prices just as President Rodrigo Duterte declared a public health emergency due to COVID-19.

RELATED: Around 30 market vendors caught violating price freeze – DTI

These developments offset the impact of higher electricity rates which power distributor Meralco will collect, the BSP added.

Prior to the latest inflation figure, Diokno unleashed a 50 basis point cut in the key interest rate and also unleashed more cash into the banking system by reducing banks' required reserves, in a bid to spur increased lending for cheaper rates. The BSP also approved a ₱300 billion bond repurchase deal to effectively lend the Treasury some money to fund the government's COVID-19 response.

Despite this, economic managers said growth would definitely slump this year due to the global pandemic, with the Philippines even likely to see a recession as a worst-case scenario, according to the National Economic and Development Authority.

Inflation is now seen to ease below the 3 percent level this year amid the slowdown in economic activity, which would fall near the low end of the state's 2-4 percent target band, the BSP earlier said.