Philippines: Inflation unlikely to hit 4% this year
MANILA, Philippines – Inflation is not likely to reach four percent this year despite the upward pressure on consumer prices over the past few months, monetary authorities and economists said over the weekend.
Bangko Sentral ng Pilipinas Governor Amando Tetangco told The STAR inflation would not hit the higher end of the central bank’s two to four percent target this year.
“The highest will be close to four but it will not even reach four percent. It will be below four percent and then it will start to go down. That is the current forecast,” he said.
Inflation was steady at 3.4 percent in April, bringing the average inflation to 3.2 percent in the first four months.
The last time inflation hit four percent was in October 2014 when it reached 4.3 percent. During that year consumer prices went up faster at 4.1 percent from three percent in 2013.
Tetangco said the uptick in inflation has been foreseen and is expected to rise gradually until the third quarter.
“If you look at the inflation path it shows an upward trend until about the third quarter that will bring inflation close to the upper end o the target range but the forecast shows it is still going to be below four percent,” he said.
During its last rate-setting meeting last March 23, the BSP’s Monetary Board slashed its inflation forecast to 3.4 instead of 3.5 percent this year and to three instead of 3.1 percent for 2018.
Tetangco said there has been some moderation over the last few months that makes the assessment in the previous meeting even more appropriate because the valuation then was that inflation remain within the target range.
“Given that, there is really no strong reason to adjust policy interest rates because the inflation rate is expected to be within the target range. But of course we continue to monitor the developments and we are not wedded to a particular trend or direction in policy,” he said.