The Market Monitor Minding the Nation's Business
The March 2026 inflation of 4.1 percent settled higher than the BSP’s announced forecast range of 3.1 to 3.9 percent, highlighting the upside inflation risks emanating from the global oil price shock. This was largely driven by higher transport-related costs following the sharp increase in domestic fuel prices, alongside higher prices of key food items, particularly rice.
The inflation risk environment has significantly shifted to the upside amid the ongoing conflict in the Middle East. A sharp and prolonged oil price shock could trigger spillover effects with the potential broadening of price pressures to the rest of the CPI basket. This could also disanchor inflation expectations and generate further second order impact. Looking ahead, mounting risks to the inflation outlook require sustained vigilance. The BSP will carefully consider incoming data at its upcoming monetary policy meeting to assess the need for action in keeping with its price stability mandate.