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Philippines: August inflation likely stayed above target
MANILA, Philippines — Inflation in August likely accelerated and stayed above the government’s two to four percent target on the back of higher food prices, weak peso and more expensive power rates, according to the Bangko Sentral ng Pilipinas.
BSP Governor Benjamin Diokno said inflation last month could settle within the 4.1 to 4.9 percent range. Inflation eased for the second straight month to four percent in July.
Diokno attributed the upward price pressures in August to higher prices of key food items and liquefied petroleum gas as well as more expensive electricity rates in areas serviced by the Manila Electric Co.
The BSP chief also cited the continued depreciation of the peso against the dollar as another source of upward risk to inflation.
Diokno explained that the decline in domestic petroleum and rice prices partially offset the upward price pressures.
“Moving forward, the BSP will continue to monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” he said.
Inflation averaged 4.4 percent in the first seven months despite easing to four percent in July from 4.1 percent in June.
Prior to easing to four percent in July, inflation stayed above the BSP’s two to four percent target since the start of the year and even peaked at 4.7 percent in February due to supply-side shocks caused by weather-related disturbances and the African swine fever (ASF) outbreak, as well as rising global oil prices.
Based on its latest assessment, the Monetary Board sees inflation averaging 4.1 percent this year and 3.1 percent for 2022 and 2023.
The BSP remains vigilant of evolving global and domestic price conditions and stands ready to deploy appropriate monetary policy tools necessary to safeguard its price and financial stability objectives.
It considers global commodity prices and their impact on domestic inflation outlook in its regular assessment of inflation dynamics and in formulating the monetary policy stance.
The Philippines is affected by significant fluctuations in global commodity prices.
Global inflation has picked up in 2021, but the nature of recent price pressures is largely transitory. The recent rise in global inflation is largely influenced by pandemic-induced changes in spending patterns, increased commodity prices, temporary demand-pull price pressures and base effects.
Commodity prices are expected to remain elevated in the coming months, but likely to remain benign over the medium term.
Diokno earlier said the BSP would do whatever it takes to keep an accommodative monetary policy stance until the Philippines fully recovers from the pandemic-induced recession.
Source: https://www.philstar.com/business/2021/09/01/2123911/august-inflation-likely-stayed-above-target