BSP cites broadening price pressures in PH

FILE: Some customers of a meat stall select choice cuts of pork and chicken at the North Olympus Public Market on Zabarte Road, Quezon City. (PNA photo by Oliver Marquez)

MANILA – Supply-side factors continue to drive the country’s inflation rate, which decelerated to 6.3 percent last August after a five-month rise, as the Bangko Sentral ng Pilipinas (BSP) cited broadening price pressures.

Last month’s inflation rate slowed from the previous month’s 6.4 percent , bringing the average level to date to 4.9 percent, above the central bank’s 2-4 percent target. Year-ago inflation is lower at 4.4 percent.

“The August 2022 inflation outturn of 6.3 percent is within the BSP’s forecast range of 5.9 to 6.7 percent, consistent with the BSP’s assessment of elevated price pressures over the near term due to broadening price pressures,” the central bank said in a statement on Tuesday.

The BSP said its baseline projections continue to point to an above-target rate of price increases this year “with inflation decelerating back to the target in 2023 and 2024 following the recent BSP policy rate hikes.”

It said upside risks continue to dominate the central bank’s near-term inflation outlook “due to the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, the sharp increase in the prices of sugar, as well as pending petitions for transport fare increases.”

“Meanwhile, the impact of a weaker-than-expected global economic recovery as well as the resurgence of local Covid-19 (coronavirus disease 2019 ) infections are the main downside risks to the outlook,” it added.

The BSP also reiterated that adjustments in the central bank’s key policy rates, which have been increased by 175 basis points since last May, “are intended to bring inflation and inflation expectations back to the target to ensure the balanced and sustainable growth of the economy in the medium term.”

“The BSP is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium-term, consistent with its primary objective to promote price stability,” it said.

The BSP also continued “to urge (for the) timely implementation of non-monetary government interventions to mitigate the impact of persistent supply-side pressures on commodity prices.”

It vowed to continue to monitor closely and assess ongoing developments that may impact price movements in the country as well as the economy’s growth prospects.