THE growth of consumer prices likely remained elevated in August this year, the Bangko Sentral ng Pilipinas (BSP) said in a statement Wednesday afternoon.
In its month-ahead inflation forecast, the BSP said inflation could have settled between 5.9 and 6.7 percent during the month. In July, inflation already hit a 4-year high at 6.4 percent.
The BSP said inflation for August was driven by the continued increase in key food prices. This could, however, be offset in part by the decline in global oil prices, the reduction in electricity rates, lower meat and fish prices, and appreciation of the peso.
Passengers get off a public-utility jeepney at a terminal in Pasay City on Wednesday, August 31, 2022. From the current P11 minimum fare that was approved in July, jeepney fare is expected to increase this month, as the Land Transportation Franchising and Regulatory Board mulls over petitions by public-transport groups, including jeepney drivers and operators, to increase their respective fares as pump prices continue to increase.
“Looking ahead, the BSP will continue to closely monitor emerging price developments to enable timely intervention that could prevent further broadening of price pressures, consistent with BSP’s mandate of price stability conducive to sustainable economic growth,” the BSP said in its statement.
Two weeks ago, the BSP monetary board raised its main interest rates by another 50 basis points to control inflationary pressures and expectations in the country. This came after an off-cycle hike of 75 basis points in July.
BSP Governor Felipe Medalla said the decision came as their latest baseline forecast for inflation has shifted higher for 2022.
According to the latest BSP projections, average inflation is projected to further deviate from the 2 to 4 percent target range of the government for the year at 5.4 percent.
In their June meeting, the BSP’s forecast for 2022 inflation was to average at 5 percent.
Contrastingly, inflation forecasts for 2023 and 2024 have declined. Inflation for next year is now expected to hit 4 percent on average, down slightly from the 4.2 percent forecast in June.
For 2024, inflation is expected to fall further into the target range at 3.2 percent from the 3.3 percent forecast in June.
A recent survey also showed that private economists see inflation averaging at 5.4 percent this year, parallel with the BSP’s latest forecast.
Analysts, however, were not yet convinced that inflation will recede down to within-target for 2023. The survey showed that private economists’ mean inflation forecast for next year is at 4.2 percent.
The target band for next year is still at 2 to 4 percent.
Image credits: Nonie Reyes, Roy Domingo