Philippines: Inflation seen back at 2 to 4% target by second quarter of 2019

MANILA, Philippines — The Department of Budget and Management (DBM) expects inflation to settle within the government’s two to four percent target by the second quarter, a top official said yesterday.

During his weekly press briefing, Budget Secretary Benjamin Diokno said inflation may continue to ease in the coming months, and settle back within the government target for 2019.

“Around second quarter,” Diokno said when asked when he expects inflation to go back within target.

According to Diokno, inflation has been tapering off since late last year after peaking at a near-decade high of 6.7 percent in September and October 2018.

“We’re coming from a very high inflation. It was 5.1 last December, 4.4 percent in January. That’s a significant drop already,” he said.

Further ahead, the budget chief sees inflation even going to as low as around two percent, or the lower end of the government target.

“In fact, there are scenarios where we’ll see inflation around two percent in the third or fourth quarter,” he said.

The last time monthly inflation fell within the government’s target was in February last year when it settled at 3.8 percent. Inflation then began to climb steadily before peaking at 6.7 percent in September and October.

But after this, price pressures started to temper down, with inflation easing for three straight months until it hit 4.4 percent in January.

Earlier, the Bangko Sentral ng Pilipinas (BSP) expects inflation to return within target as early as March.

The central bank also lowered its latest inflation forecast for 2019 to 3.1 percent from the previous estimate of 3.2 percent, while the 2020 projection was maintained at three percent.

To further reign in inflation, economic managers earlier said they would continue to push for the implementation of non-monetary and administrative measures that would prevent supply bottlenecks, particularly in the agriculture sector.