Balance of risks for 2021 inflation still ‘on the upside’: Diokno

MANILA – The rate of price increases decelerated to 4.6 percent last October from month-ago’s 4.8 percent but Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the balance of risks remains on the upside.

Last month’s inflation rate is near the lower end of the central bank’s 4.5-5.3 percent forecast range for October and brought the year-to-date average to 4.5 percent.

“The balance of risks to the inflation outlook remains on the upside for the remaining months of 2021 but continues to be broadly balanced for 2022 and 2023,” Diokno told journalists in a Viber message on Friday.

He reiterated that average inflation this year is projected to stay above the target band but to stay within target in the next two years.

As of the last rate-setting meet of the central bank’s policy-making Monetary Board (MB) last September, the BSP’s average inflation forecast for this year is 4.4 percent while it is 3.1 percent for the next two years.

Diokno said their inflation forecasts until the next two years are in line with private sector economists’ expectations.

He said monetary authorities continue to view “that supply-side price pressures are best addressed by timely non-monetary interventions that could ease domestic supply constraints.”

“In this regard, the National Government is currently pursuing direct measures to enhance the availability of key goods, such as pork, rice and fish,” he said.

He also noted the announcement of fuel subsidy amounting to PHP1 billion for affected public utility vehicle (PUV) stakeholders as well as the increased allowable capacity in PUVs.

These measures, he said, “can help support the transport sector and help prevent second-round effects amid rising oil prices.”

“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. The BSP is also reviewing its assessment of the price environment ahead of the 18 November monetary policy meeting,” he added.