BY MAX ESTAYO

INFLATION climbed 6.4 percent in March, the fastest in 19 months, due to soaring prices of food and oil, the government said yesterday.

The level rose from 5.4 percent in February and 2.2 percent last year, bringing the average for the first three months to 5.6 percent, above the Bangko Sentral ng Pilipinas' full-year target of 3 to 5 percent.

The BSP had forecast inflation to be at 5.3 to 5.9 percent in March.

"The rate reflects the impact of negative global development, particularly the unprecedented rise in both oil and non-oil commodity prices. Double-digit movements of rice, cereals and dairy products pushed domestic inflation beyond 6 percent," said BSP Gov. Amando Tetangco Jr.

In March, inflation for food, beverage and tobacco jumped 8.2 percent year-on-year from 6.8 percent in February.

The annual inflation for food alone, which accounts for more than 46 percent of the inflation basket, rose 8.4 percent from 7 percent a month earlier.

"We note that supply shocks are generally temporary. The government has taken initial measures to address the tight supply of rice through higher importation and increase in farm gate prices to encourage more production. Better conditions are also expected this month as we go into the full harvest season," Tetangco said.

The BSP has an inflation target of 4 percent plus or minus one percentage point this year, or 3 to 5 percent. While the target is at risk from higher food and commodity prices, Tetangco said monetary authorities project inflation in 2009 to be within target.

"We expect that with the appropriate monetary policy continuing to anchor inflation expectations, the '09 inflation target of 2.5 to 4.5 percent will be achieved," Tetangco said.

Since the risks to prices are mostly supply-related, the rise in inflation can't be addressed by an adjustment in policy rates, he said.

The BSP kept its key rates unchanged in February, a direction that analysts expect monetary authorities to take given the build-up in inflation pressures notwithstanding the deceleration in liquidity growth.

In March, inflation for all commodity groups rose, the National Statistics Office said. Inflation for fuel, light and water went up to 6.2 percent from 4.6 percent in February, clothing, 3.6 percent from 3.4 percent, and housing and repairs, 3.1 percent from 2.8 percent.