5.1-5.8% PH inflation forecast for July not alarming: Diokno

“(It is) not alarming,” he said during the weekly Breakfast with Ben briefing held this Wednesday at the agency’s office in Manila. (File Photo: Department of Budget and Management)

MANILA — Budget and Management Secretary Benjamin Diokno said the higher range set by the Bangko Sentral ng Pilipinas (BSP) for its July 2018 inflation projection, at between 5.1-5.8 percent, is not worrisome.

“(It is) not alarming,” he said during the weekly Breakfast with Ben briefing held this Wednesday at the agency’s office in Manila.

On Tuesday, the central bank said its Department of Economic Research (DER) attributed the forecast range to increase of electricity rates in areas being serviced by the Manila Electric Company (Meralco) and water rates in areas covered by the Manila Water Company Inc. (Manila Water) and Maynilad Water Services Inc. (Maynilad).

Additional factors that are expected to contribute to elevated inflation rate in the country in the seventh month this year are upticks in jeepney fare, scheduled increase in tobacco excise tax and higher prices of rice and other agricultural commodities.

However, the BSP said these risks to inflation are seen to be offset by the “slight downward adjustment in domestic diesel prices for July.”

Rate of price increases in the domestic economy has been rising since last year on account of the increases of fuel prices in the international market, among others.

It peaked at 3.1 percent in October but decelerated in the next two months.

However, it climbed anew last January when it hit 3.4 percent, way higher than the 2.5 percent in January 2017 and 2.9 percent last December.

Aside from higher oil prices overseas, increase in sin taxes also contributed to faster inflation rate as well as the impact of the first package of the Tax Reform for Acceleration and Inclusion Act, which introduced excise tax for sugar-sweetened beverages and vehicles and increased excise taxes of oil products.

Inflation this year breached the government’s 2 to 4 percent target starting last March when it rose to 4.3 percent.

Last June, it rose further to 5.2 percent bringing the year-to-date average to 4.3 percent.

Monetary officials expect inflation to remain elevated this year and peak in the third quarter before decelerating and stay within target levels in 2019.