NextGen Day

As long as the pace of price growth is high, the Bangko Sentral ng Pilipinas (BSP) stated it will continue to monitor inflation risks and support targeted assistance for vulnerable sectors.

The national government’s initiatives to guarantee a sufficient supply of essential food commodities are supported, the central bank stated in a statement on Tuesday.

Low farm productivity and high production costs, which are exacerbated by supply disruptions on a global scale, persistent animal diseases, the uncertainty resulting from the conflict between Ukraine and Russia, and tariff and non-tariff restrictions on agricultural trade, continue to limit the overall supply of agricultural commodities, according to the report.

According to the BSP, combating high inflation necessitates a comprehensive government strategy to shield weak economic sectors from the effects of high prices.

It has been raising its key policy rates to assist in combat the growing inflation rate that is being exacerbated by both the impact of the Russia-Ukraine conflict and the rise in global oil prices as well as supply problems for a number of food commodities both domestically and overseas.

Pork, rice, and sugar are just a few foods whose supply has been increased by the national government to lessen the impact they have on the country’s inflation rate.

According to the BSP, the national government’s targeted actions to boost farm productivity and reduce supply-side pressures on major food products are essential for reducing inflationary pressures.

In order to avoid inflation expectations from hardening, it was emphasized that the central bank’s monetary policy activities “are also functioning in unison with fiscal policy and programs.” “The BSP is vigilant in monitoring all threats to the inflation outlook and is prepared to take any necessary monetary policy action to steer the economy toward a sustainable growth path and bring inflation toward a target-consistent path over the medium term.”

The domestic inflation rate decelerated to 6.3 percent in August of last year before accelerating to 6.9 percent in September, the fastest since October 2018.

The government’s target range of 2-4 percent was exceeded by the average inflation rate throughout the first three quarters of the year, which was 5.1%.

Last March, when it increased to 4%, the monthly inflation rate went above the government’s goal range, primarily as a result of rising international oil prices and shortages of a number of staple foods.

It increased for five straight months before slowing down in August of last year as a result of slower growth in the transport, food, and non-alcoholic beverage indices.

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