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Philippines: Inflation has potential to climb 4.7% in June — BSP
MANILA, Philippines — Higher power costs and a slightly weaker currency likely stoked faster consumer price growth in June, although the spike was likely cushioned by more affordable food items.
In a statement on Wednesday, the Bangko Sentral ng Pilipinas said it expects inflation to settle between 3.9% and 4.7% this month. If the upper-end of the forecast range is realized, it would be faster than 4.5% print recorded in May, which has been unchanged since March when inflation eased from a 2-year high.
In the first 5 months, inflation averaged 4.4%, the fifth straight month that price growth breached the BSP’s own 2-4% annual target.
Much of the price upticks this month came from higher electricity rates in areas served by Meralco, the central bank said. To recall, the country’s largest power distributor hiked its overall rate by P0.0798 per kWh in June after power producers raised electricity prices due to tight supply conditions in the Luzon grid.
At the same time, a weaker peso pushed up import costs, adding some upward price pressures. From the first trading day of June, the local unit has since depreciated by 1.9% against the US dollar, data showed.
Partly offsetting the price hikes was the decline in prices of key food items such as rice, meat and fruits “due to improved supply conditions.” Supply stabilized as shipments of pork from abroad start arriving to plug a massive deficit caused by the African swine fever outbreak. According to the agriculture department, 70% of imported pork allowed to be shipped in with lower tariff would arrive between July and October, while the rest would come between November and January 2022.
As it is, a month of manageable inflation would allow the BSP to sustain its benchmark rate at all-time and help the economy recover from a pandemic-induced recession. Last week, the powerful Monetary Board left the policy rate untouched, with some analysts not expecting any rate hikes this year.
“Moving forward, the BSP will continue to monitor emerging price developments to ensure that its primary mandates of price stability conducive to balanced and sustainable economic growth is achieved,” the BSP said.
Source: https://www.philstar.com/business/2021/06/30/2109179/inflation-has-potential-climb-47-june-bsp