Economists: Quarantine measures, price freeze restrained inflation in March

Most economists expect last month’s inflation rate to have slowed year-on-year amid lower global oil prices and the price freeze imposed on goods following the enhanced community quarantine placed over Luzon beginning mid-March.

Of the 12 economists polled by the Inquirer last week, 11 projected the rate of increase in prices of basic commodities last March to be lower than the 3.3 percent a year ago and February’s 2.6 percent.

London-based Capital Economics in a report last Friday had the lowest forecast at 1.2 percent, an outlier as all other forecasts were above 2 percent. The Philippine Statistics Authority (PSA) will release the March inflation figure on Tuesday, April 7.

Philippine National Bank’s Francisco G. Trinidad Jr. sees March headline inflation at 2 percent, noting global crude prices plunged by half that month, while the lockdown in Luzon and other parts of the country tempered demand for food and services.

UnionBank of the Philippines’ Ruben Carlo O. Asuncion projected 2.1 percent as “consequent price freezes implemented by corresponding government agencies may help maintain price levels.”

President Duterte placed the Philippines under a state of calamity and national emergency due to the new coronavirus disease (COVID-19) pandemic. As a result, the government imposed a price freeze on most food products and goods needed by the public while on quarantine

HSBC’s Noelan Arbis and Security Bank Corp.’s Robert Dan J. Roces shared a forecast of 2.2 percent.

They warned that “near to medium-term upside risks to inflation could emanate from rice as Vietnam, the country’s major source of imported rice, halted new rice export contracts as it reviewed their stocks.”

ANZ Research’s Mustafa Arif and ING Bank’s Nicholas Antonio T. Mapa both projected 2.3 percent.

“Looking ahead, the slowdown in activity due to the COVID-19 lockdown as well as much lower oil prices suggest that inflation may well undershoot the Bangko Sentral ng Pilipinas’ target band [of 2 to 4 percent] in the coming months,” Arif said.

Three economists placed their forecast at 2.4 percent—Bank of the Philippine Islands’ Emilio S. Neri Jr., Rizal Commercial Banking Corp.’s Michael L. Ricafort, and University of Asia and the Pacific’s Victor A. Abola.

But Neri pointed out that “we are not sure if there was full compliance with the Department of Trade and Industry’s suggested retail price/price ceiling directive given limited mobility.”

For Ricafort, “reduced business and economic activities due to quarantine/lockdowns locally and in many countries around the world as part of stringent measures to prevent the coronavirus from spreading further could fundamentally help ease/lower inflation eventually, going forward.”

Meanwhile, Abola said “the huge fall in fuel prices will more than offset the slight increase in food prices, which may rise due to logistics problems due to COVID-19.”

Banco De Oro Unibank’s Jonathan L. Ravels projected 2.5 percent, while Sun Life Financial’s Patrick M. Ella’s 2.7 percent was the lone forecast above the February rate. INQ