After the government reported that consumer price growth had reached its lowest level in six months, the Bangko Sentral ng Pilipinas (BSP) said that inflation would remain over the target in the near future.
In a statement released on Tuesday, BSP Governor Benjamin Diokno noted that June 2021 inflation of 4.1 percent was within the central bank’s forecast range of 3.9 to 4.7 percent.
According to Diokno, a major contributor to the lower rate of inflation was the lower annual rate of increase in the transport index, which was 9.6 percent, down from 16.5 percent in May 2021.
“The latest inflation number is consistent with expectations that inflation could remain above target in the near term as meat and oil prices remain elevated,” Diokno said.
He added that average inflation this year will be at the higher end of the projected range of 2 to 4 percent. However, price pressures are expected to lessen, with average inflation returning to the target midway in 2022-2023.
Inflation is expected to settle at 4 percent in 2021, according to the Bangko Sentral, before dropping to 3 percent in 2022 and 2023.
“The effective implementation of direct non-monetary measures will be crucial in mitigating further supply-side pressures,” Diokno said.
He added that the risks to the inflation outlook are similarly well-balanced. Due to supply-chain bottlenecks, international commodity prices have risen, and worldwide demand has recovered, putting upward pressure on inflation.
The central bank chief did say, however, that the emergence of new coronavirus variants continues to be a source of concern for the inflation projection, which might delay the lifting of the lockdown and weaken domestic growth expectations.
“The BSP remains watchful over the evolving economic conditions and challenges brought about by the pandemic to ensure that the monetary policy stance remains consistent with its price and financial stability objectives,” Diokno said.
BY MEYNARD DELA CERNA