The March inflation of 4 percent is within the Bangko Sentral ng Pilipinas forecast range of 3.3 to 4.1 percent.

Average inflation could breach the upper end of the 2-4 percent target range in 2022 at 4.3 percent due largely to higher global crude oil prices.

Nevertheless, average inflation is projected to decline and settle within the target band at 3.6 percent in 2023. Inflation expectations have likewise risen, but continue to be anchored to the 2-4 percent target band.

The economic consequences of Russia’s invasion of Ukraine have become a significant headwind in global economic recovery.

In particular, the Russia-Ukraine conflict could the affect the Philippines through slower world GDP growth, higher crude oil prices, higher world non-oil prices, and potential second-round effects on inflation through transport fares, wages, and food prices.

Among all these, the main channel through which the Russia-Ukraine war could affect the Philippines is through higher commodity prices.

Under these circumstances, the BSP will closely monitor the emerging risks to the outlook for inflation and growth, and remain vigilant against possible second-round effects from supply-side pressures or any shifts in the public’s inflation expectations.

The BSP at the same time continues to have a wide arsenal of policy instruments to respond to possible adverse impact of external shocks.

The BSP likewise supports the timely implementation of direct non-monetary measures by the government to mitigate the impact of the Ukraine conflict on global oil and non-oil commodity prices.

Previous episodes of supply-side shocks in the country have shown that these are best addressed through timely non-monetary policy interventions that could ease directly domestic supply constraints and prevent second-round effects on prices. BSP