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According to Moody’s Analytics, the domestic inflation rate fell to 8.4% in March from 8.6% in February, in part due to the drop in global oil prices and the improvement in crop harvests.

Although the supply of some agricultural products has increased and oil prices have decreased compared to last year, Moody’s Analytics economist Sarah Tan told the Philippine News Agency (PNA) that “prices of important food staples and utility bills are keeping inflation high.”

“Households are crying over the nearly twofold spike in red onion costs year over year, a staple in Filipino cuisine. Also, people are beginning to feel the effects of rising electricity prices after one of the nation’s major utilities, Meralco (Manila Electric Company), raised its rates in March, according to the expert.

The Bangko Sentral ng Philippines (BSP) is anticipated to increase its policy rate setting as the inflation rate slows.

If the inflation figures show a significant and sustained downward trend, according to Tan, the BSP might feel confident enough to suspend their rate rise rally.

If not, she continued, “We should anticipate the BSP to apply more force to the brakes until the inflation train is clearly slowing.”

With the still high inflation rate in the second month of this year, the Monetary Board (MB), which sets policy for the BSP, increased the main rates of the central bank by 25 basis points in March of last year.

The BSP expects inflation to continue to be over the government’s goal range of 2 to 4 percent through the third quarter of this year.

According to Tan, domestic demand has been rather resilient despite the high inflation.

The increasing borrowing costs will eventually reduce household expenditure, she said, with the central bank’s cumulative hikes amounting to a staggering 425 basis points so far.

“This will limit the country’s growth this year,” she continued, “together with the slowing global economy harming the demand for what the Philippines sells to the globe.”

According to Moody’s Analytics, the Philippine economy would expand by 5.7% this year.

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