Inflation hits 4.9 percent in August

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Rate of price increases accelerated to its fastest since January 2019
at 4.9 percent last August but the Bangko Sentral ng Pilipinas (BSP)
maintains that inflation outlook remains broadly balanced and expects
within-target level by end-2021.

BSP Governor Benjamin Diokno, in a Viber message to journalists on
Tuesday, said the August 2021 inflation rate is within the central
bank’s 4.1 to 4.9 percent forecast range for last month and is in line
with the central bank’s “assessment that inflation could settle close
to the high end of the target range in the near term before
decelerating back to within the target range by year-end.”

“The risks to the inflation outlook remain broadly balanced over the
policy horizon,” he said.

He traced the upside risks to inflation and aggregate demand to “the
uptick in international commodity prices due to supply-chain
bottlenecks and the recovery in global demand.”

He, however, said these factors are seen to be countered by “the
emergence of new coronavirus variants” since this factor leads to
“stricter lockdown measures and delayed reopening of the economy.”

Inflation rose from last July’s 4 percent due mainly to increases in
the heavily-weighted food and alcoholic beverages index.

This brought the eight-month average inflation to 4.425 percent, which
is above the government’s 2 to 4 percent target band. The year-ago
inflation rate is at 2.4 percent.

Diokno said the inflation rate for 2022 to 2023 “will likely fall
towards the midpoint of the target, supported by the continued and
timely implementation of non-monetary measures and reforms to address
directly supply-side pressures on key food items.”

“Looking ahead, the BSP stands ready to maintain its accommodative
monetary stance for as long as necessary to support the economy’s
sustained recovery to the extent that the inflation outlook would
allow,” he added.

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