Philippines: BSP sees inflation rising until Q3
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) sees inflation rising closer to the upper end of the two to four percent target until the third quarter due to elevated oil and food prices.
BSP Governor Amando Tetangco Jr. said in his speech during the economic briefing 2017 and general membership meeting of the Management Association of the Philippines consumer prices would continue to rise faster until the third quarter.
“A closer scrutiny of the monthly inflation path will show that inflation imprints will be rising until sometime third quarter of 2017. And the monthly rates are expected to be very close to the upper band of the target range,” Tetangco said.
Inflation kicked up to a 27-month high of 3.3 percent in February from 2.7 percent in January due to higher oil prices and transport fares as well as more expensive power rates.
This brought the average inflation in the first two months of the year to three percent, the mid point of the BSP target of two to four percent between 2017 and 2020.
For March, the BSP sees inflation ranging from three to 3.8 percent due to the projected increase in power rates in areas serviced by the Manila Electric Co. (Meralco) as well as the continued weakening of the peso against the dollar amid the normalization of interest rates in the US.
“Going forward we see average inflation to be within the target range of two to four percent for 2017 and 2018. Even so our forecast path suggest that monthly inflation will slowdown thereafter resulting to within target full-year averages over the policy horizon or the next two years,” he said.
Last Thursday, the BSP lowered the inflation forecast to 3.4 percent and to three percent instead of 3.1 percent for 2018 on lower oil prices and global economic uncertainties.
Tetangco pointed out the Philippines managed to post 72 consecutive quarters of positive gross domestic product (GDP) growth amid the benign inflation environment.