By Karen Lema and Mikhail Flores
MANILA (Reuters) – The Philippines posted its slowest annual inflation rate in nearly five years in March as food and transport prices eased, but the central bank said it would stick to a “measured approach” in cutting interest rates.
The consumer price index rose 1.8% in March, below the previous month’s 2.1% rate and the 2.0% median forecast in a Reuters poll, and was the lowest since May 2020 when the rate hit 1.6%.
The Bangko Sentral ng Pilipinas said in a statement it will maintain a “measured approach” to monetary easing as uncertainty over global economic policies have “increased significantly”.
“On balance, uncertainty in the outlook for inflation and growth continues to be a key factor in the setting of monetary policy,” the central bank said.
The Philippine central bank unexpectedly kept its key interest rate steady in February after three consecutive 25-basis-point cuts in previous reviews, citing uncertainties over global trade policies.
BSP Governor Eli Remolona said last month the central bank remained on an easing cycle and could cut rates at its April 10 meeting.
“Target consistent inflation and slowing growth momentum should be enough to convince the Bangko Sentral ng Pilipinas to cut rates by 25 basis points next week,” Nicholas Mapa, chief economist at Metropolitan Bank & Trust Co, said on X.
Core inflation, which strips out volatile energy and food prices, also eased to 2.2% in March from 2.4% in February.
The March reading brought the average inflation rate in the first three months of the year to 2.2%, within the central bank’s 2%-4% target for the year.
Contributing to the slower inflation in March was the 7.7% decline in rice prices, the steepest since March 2020, and the 1.1% drop in transport costs, the statistics agency said.
(Reporting by Mikhail Flores and Karen Lema; Editing by John Mair and Stephen Coates)
