MANILA – Decline of oil prices in the international market is expected to decelerate further Philippines’ inflation rate, with the April 2020 figure seen to stay within 1.9 percent to 2.7 percent range.
In a Viber message to journalists Thursday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said “the progressive fall in inflation will continue.”
“The collapse in oil prices is expected to moderate inflationary pressure coming from higher prices of rice and other food items, along with upward adjustment in electricity rates in (the) Meralco-serviced area,” he said.
With these factors, Diokno said monetary officials will closely monitor developments vis-à-vis the BSP’s policy stance.
“Looking ahead, BSP will remain watchful of economic and financial developments here and abroad to ensure that monetary policy settings remain consistent with price stability conducive to a balanced and sustainable economic growth,” he added.
Inflation rate last March slowed to 2.5 percent from month-ago’s 2.7 percent, bringing the average in the first quarter to 2.7 percent.
Except for a one-month uptick in May 2019 when inflation rate rose to 3.2 percent from month-ago’s 3 percent, domestic inflation rate sustained its slowdown after peaking at 6.7 percent in September and October 2018 caused by supply side factors.
Monetary officials expect inflation to continue to slow in the coming months partly because of the enhanced community quarantine (ECQ) in most parts of the country being implemented to arrest the spread of coronavirus disease (Covid-19).
The government’s inflation target from 2020 to 2022 has been set between 2 to 4 percent.
BSP’s policy-making Monetary Board (MB), during its rate setting meet last March 19, forecast inflation to average at 2.2 percent this year, and 2.4 percent next year.
During its meeting last March 26, the Board adopted a 1.75 to 3.75-percent forecast range for inflation rate this year from 2 to 4 percent previously.
Principals of the inter-agency Development Budget Coordination Committee (DBCC) approved through an Ad Referendum the same projections during their meeting last March 27.
Diokno, in a message to journalists Thursday, said the government’s inflation target is subject to quarterly review and decisions by the DBCC through inputs from the BSP.
He said the central bank forecasts monthly inflation rate through assessment of various international and domestic factors like oil prices, commodity prices, foreign exchange rate, transport fees, utility rates, and minimum wages.