PH inflation hits 32-month high at 4.9% in August

MANILA – Rate of price increases accelerated to its fastest since January 2019 at 4.9 percent last August but the Bangko Sentral ng Pilipinas (BSP) maintains that inflation outlook remains broadly balanced and expects within-target level by end-2021.

BSP Governor Benjamin Diokno, in a Viber message to journalists on Tuesday, said the August 2021 inflation rate is within the central bank’s 4.1 to 4.9 percent forecast range for last month and is in line with the central bank’s “assessment that inflation could settle close to the high end of the target range in the near term before decelerating back to within the target range by year-end.”

“The risks to the inflation outlook remain broadly balanced over the policy horizon,” he said.

He traced the upside risks to inflation and aggregate demand to “the uptick in international commodity prices due to supply-chain bottlenecks and the recovery in global demand.”

He, however, said these factors are seen to be countered by “the emergence of new coronavirus variants” since this factor leads to “stricter lockdown measures and delayed reopening of the economy.”

Inflation rose from last July’s 4 percent due mainly to increases in the heavily-weighted food and alcoholic beverages index.

This brought the eight-month average inflation to 4.425 percent, which is above the government’s 2 to 4 percent target band. The year-ago inflation rate is at 2.4 percent.

Diokno said the inflation rate for 2022 to 2023 “will likely fall towards the midpoint of the target, supported by the continued and timely implementation of non-monetary measures and reforms to address directly supply-side pressures on key food items.”

“Looking ahead, the BSP stands ready to maintain its accommodative monetary stance for as long as necessary to support the economy’s sustained recovery to the extent that the inflation outlook would allow,” he added.