March inflation eases as oil prices crash

INFLATION further eased in March from the previous month, as the Bangko Sentral ng Pilipinas (BSP) expects domestic prices to remain benign amid the Covid-19 outbreak.

Inflation slowed to 2.5 percentfrom 2.6 percent in February, falling within the central bank’s two to 2.8 percent forecast. It also marked the slowest reading in three months.

Price growth in basic goods also slowed down last month, data released Tuesday, April 7, 2020, showed.

The global oil price collapse in March contributed to the low inflation as millions around the world have stayed home to contain the spread of the novel coronavirus. Consumption was also limited to food and medical supplies as public transport and commercial centers temporarily shut operations.

Erwin Gok-ong, president at the Cebu Market Vendors Development Cooperative, said prices of goods sold in Carbon Market, the biggest public shop in Cebu City, have remained stable amid the enhanced community quarantine.

“Prices of vegetables, fish and meat have remained stable,” he told SunStar Cebu in Cebuano.

Foot traffic at the public market has significantly decreased since people were told to stay home.

“As a consequence, our sales have also gone down because we no longer receive orders from hotels and restaurants,” he said.

In a statement Tuesday, the BSP said the uncertainty over the coronavirus pandemic’s duration poses significant downside risks to aggregate demand, noting the disruptions in several industries and private spending are likely to slow down economic growth in the near term.

BSP Gov. Benjamin Diokno said there was room for more policy action to address the real risk of a recession.

The central bank had cut 50 basis points off the benchmark interest rate in March, bringing it to 3.25 percent. It also cut the reserve requirement ratio for banks by 200 points, a move aimed at freeing up more cash to circulate in the economy.

Inflation in April is likely to be even lower, with the collapse of world oil prices, the price freeze on basic necessities and zero or near-zero increase in prices of utilities. The next policy meeting of the Monetary Board of the BSP is scheduled on May 21, 2020.

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