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Philippines – Guinigundo: Inflation expected to peak in Q3
Inflation could still breach 4.0 percent, a senior Bangko Sentral ng Pilipinas (BSP) official indicated, likely peaking in the July-September period.
“In terms of our preliminary estimates on the monthly movements of inflation, we expect inflation to peak by the third quarter,” central bank Deputy Governor Diwa Guinigundo told reporters.
“Thereafter, we should be seeing on a monthly basis the inflation rate of 4 percent or lower than 4 percent,” he added.
Domestic inflation surged to 3.9 percent in February from 3.4 percent in January — near the top end of the central bank’s 2.0-4.0 percent target range — based on 2012 prices.
Using 2006 prices, however, February inflation breached the target at 4.5 percent. State statisticians, who have cited the need to rebase their data sets, will continue to use both 2006 and 2012 prices until July.
The Bangko Sentral’s policymaking Monetary Board, which previously forecast inflation to average 4.3 this year under the old data series, has since revised its projection to 3.9 percent using 2012 prices.
From the previous outlook of inflation breaching 4.0 percent in 2018 before returning to target in 2019, monetary authorities now expect the rise in consumer prices to stay within 2.0-4.0 percent for both years.
Following last week’s latest policy meeting, the Monetary Board said that it was raising the 2018 forecast to 3.9 percent from 3.8 percent and trimming the 2019 estimate to 3.0 percent from 3.1 percent.
Guinigundo said that higher food prices, a weaker peso, slower growth in oil prices and base effects were considered.
The higher inflation forecast for 2018, he explained, is due to expected higher food prices at the end of the harvest season and the depreciation of the peso.
“If you look at the recent tends, the decline in inflation rate from 2018 to 2019 is due to the slower growth in oil prices,” Guinigundo said.
“The base effects would have also died down by 2019 and we should also expect that some of the mitigants, particularly the rice tariffication, the conditional cash transfer as well as Pantawid Pasada would have taken effect by the second half of 2018 and will spill over to 2019,” he added.
Guinigudo was referring to government plans to replace quantitative restrictions on rice with tariffs and programs aimed at mitigating the impact of higher taxes on the poor and jeepney drivers.
Source: http://www.manilatimes.net/guinigundo-inflation-expected-to-peak-in-q3/388562/