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Philippines – BSP: Digitalization to ease inflation
THE wider adoption of digital payments in the country will have a favorable impact on inflationary trends in the future, according to the Bangko Sentral ng Pilipinas (BSP).
“Digitalization is one of the huge changes that will have an effect in lowering the inflation in the long run,” BSP Governor Benjamin Diokno was quoted as saying in a central bank statement released on Tuesday.
It said that, in addition to monetary and fiscal policy, technology improvements can assist in keeping costs low and steady over time. Digitalization lowers production and distribution expenses for firms by making payments and transactions more convenient.
At the same time, technology has made it easier than ever for consumers to collect information on products and services and make informed purchases, the Bangko Sentral noted.
Altogether, these forces encourage competition among enterprises to capture or maintain market share which, in turn, helps keep consumer prices low and stable. Overall, these forces stimulate competition among enterprises to capture or maintain market share, which helps keep consumer prices low and steady.
The BSP has raised its inflation forecast for 2022 to 3.4 percent from 3.3 percent. The estimate for 2023 has been retained at 3.2 percent.
The central bank’s policymaking Monetary Board has said risks to the inflation outlook continue to lean to the upside for 2022, while staying broadly balanced for 2023.
“Upside risks are linked mainly to the potential impact of continuing constraints on the supply of key food items and petitions for transport fare hikes. Strong global demand amid lingering supply chain bottlenecks could also exert further upward pressures on international commodity prices,” it explained during a Dec. 16, 2021 rate-setting meeting.
In order to counteract potential supply side inflationary pressures, monetary authorities said that efficient implementation of nonmonetary policies to ensure enough domestic food supply must be maintained. Meanwhile, they warned that the introduction of new Covid-19 variants continues to put downward pressure on growth and inflation expectations.
Source: https://www.manilatimes.net/2022/01/19/business/top-business/bsp-digitalization-to-ease-inflation/1829858