BSP raises inflation projection

FILE: Monetary Board Chairman & BSP Governor Nestor Espenilla, Jr. with Deputy Governor Diwa Guinigundo at May 10’s monetary policy briefing. (Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA — The central bank’s policy-making Monetary Board (MB) on Thursday revised upwards the Bangko Sentral ng Pilipinas’ (BSP) inflation projection for 2018-19 amid rising inflation.

In a briefing, BSP Deputy Governor Diwa Guinigundo said this year’s projection was raised to 4.9 percent while next year’s forecast was hiked to 3.7 percent.

These were at 4.5 percent for 2018 and 3.3 percent for 2019 in the previous rate setting meet of the Board last June.

The 2020 projection is 3.2 percent.

There figures were decided upon after the Board noted the rise of inflation in the country, which rose to multiyear high of 5.7 percent from month-ago’s 5.2 percent.

To date, rate of price increases averaged at 4.5 percent, higher than the government’s two to four percent target until 2020.

Guinigundo traced the upside revision of the target for this year alone to increase of jeepney fare in the National Capital Region (NCR) and Regions 3 and 4.

He said Other Transport alone is about 4.8 percent of the country’s consumer price index (CPI) basket.

Another factor is the hikes in water rates of Maynilad and Manila Water, which account for 1.2 percent of CPI last July.

Scheduled increase of excise tax on tobacco products by Php2.50 per pack this year also contributed to the hike in inflation projection for this year as this accounts for 0.93 percent of CPI.

Base effects of higher inflation last year on account of dubai oil prices is another factor to this year’s projection.

And while inflation projection for next year was revised up, Guinigundo said the level is lower than 2018.

Meantime, BSP Governor Nestor A. Espenilla Jr. said the Board has cited the risks that inflation might continue to surpass the target next year but stressed that what people should focus on is the full-year figure and not the monthly levels.

“At this point in time it is best to focus on the average,” he added.