Philippines: April inflation likely at 3-3.8% – BSP

• Apr 28, 2017

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) sees inflation rising to between three and 3.8 percent this month due to higher oil prices as well as more expensive power and water.

BSP Governor Amando Tetangco Jr. said inflation would remain elevated due to the upward adjustments in electricity and water rates as well as higher domestic fuel prices.

He explained the strengthening of the peso against the dollar and the lower LPG prices would partially offset higher oil prices as well as electricity and water rates.

“Moving forward, the BSP will remain watchful of economic and financial developments that could affect the inflation outlook in line with its commitment to price stability conducive to a balanced and sustainable growth of the economy,” Tetangco said.

Inflation quickened for the fifth straight month in March, hitting a 28-month high of 3.4 percent from 3.3 percent in February due to higher oil prices and electricity costs.

The BSP chief earlier said “runs show that the path of monthly inflation shows upticks until about the third quarter of this year before slowly decelerating to average within the target range.”

Inflation is expected to rise close to the upper bound of the BSP’s two to four percent target until the third quarter of the year due to elevated food and oil prices.

Inflation in March was the highest since November 2014 when the consumer price index averaged 3.7 percent. It has been inching up steadily from 2.3 percent in October to 2.5 percent in November, 2.6 percent in December, 2.7 percent in January, 3.3 percent in February, and 3.4 percent in March.

This brought the average inflation to 3.2 percent in the first three months.

Last month, the central bank lowered the 2017 inflation forecast to 3.4 percent from the original forecast of 3.5 percent for this year and to three percent instead of 3.1 percent for 2018 on lower oil prices and global economic uncertainties.

The Philippines managed to post 72 consecutive quarters of positive gross domestic product (GDP) growth amid the benign inflation environment. Economic growth accelerated to 6.8 percent last year from 5.9 percent in 2015 amid the boost from election-related spending as well as higher investment growth.

Economic managers penciled a GDP growth of between 6.5 and 7.5 percent for this year.

The robust domestic demand and benign inflation environment has allowed monetary authorities to keep a dovish stance. It last tweaked interest rates in September 2014 when key rates were increased by 25 basis points.

Source: http://www.philstar.com/business/2017/04/28/1694484/april-inflation-likely-3-3.8-bsp