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Philippines: BSP sees inflation peaking earlier than expected

  • Jun 11, 2018

MANILA, Philippines — Inflation may peak earlier-than-expected this year due to the lower-than-expected turnout for the month of May, according to the Bangko Sentral ng Pilipinas (BSP).

BSP Deputy Governor Diwa Guinigundo said inflation may peak sooner than the fourth quarter forecast as inflation accelerated to just 4.6 percent in May from 4.5 percent in April.

This was lower than the projected 4.9 percent by the Department of Finance and the 4.6 to 5.4 percent range set by the BSP for the month of May.

“Am sure there will be changes for the better. Let us wait and see,” Guinigundo said.

Last month, the BSP said inflation may remain elevated until the end of the year instead of the third quarter amid rising oil prices, as well as the second round effects of the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Law.

  Aside from lifting benchmark rates last May 10, the BSP also raised its inflation forecast to 4.6 percent for this year and to 3.4 percent for next year.

The consumer price index (CPI) averaged 4.1 percent in the first five months, slightly above the BSP’s two to four percent target for this year and next year.

Guinigundo explained the month-on-month seasonally adjusted inflation continued to decelerate to 0.2 percent in May from 0.7 percent in March and 0.3 percent in April.

Core inflation that excludes selected food and energy items was slightly higher at 3.6 percent in May from 3.5 percent in April.

“You don’t use monetary policy to arrest oil prices, food, and rice issues,” Guinigundo said.

BSP Governor Nestor Espenilla Jr. had said there are signs that inflation is slowing and may be close to peak.

“It helps that oil prices seem to have peaked and food price inflation is also slowing down,” Espenilla said.

However, the BSP chief said inflation outlook continues to be a concern and requires close attention as it remained elevated last month.

“The Monetary Board will consider what further adjustments are necessary to firmly anchor inflationary expectations and ensure that the inflation target will be achieved in 2019,” Espenilla said.

Source: https://www.philstar.com/business/2018/06/11/1823406/bsp-sees-inflation-peaking-earlier-expected#XHxMgf8AgRzd4Or5.99