NextGen Day

As the Bangko Sentral ng Pilipinas (BSP) highlighted broadening pricing pressures, supply-side factors continued to drive the country’s inflation rate, which decelerated to 6.3 percent last August following a five-month climb.

The average level of inflation to date is 4.9 percent, which is more than the central bank’s target range of 2-4 percent. Last month’s inflation rate decreased from the month before when it was 6.4 percent. Inflation from a year earlier was lower, at 4.4 percent.

The central bank stated in a statement on Tuesday that the August 2022 inflation outturn of 6.3 percent was within its anticipated range of 5.9 to 6.7 percent and was in line with its view of rising price pressures over the short term due to broadening pricing pressures.

According to the BSP, its initial estimates continue to show that prices will rise over target this year, “with inflation decelerating back to target in 2023 and 2024 following the previous BSP policy rate hikes.”

According to the report, the central bank’s short-term inflation outlook is still dominated by upside risks “due to the potential impact of higher global non-oil prices, the ongoing scarcity of domestic fish supply, the sharp increase in the price of sugar, as well as pending petitions for transport fare increases,”

The report continued, “The key downside risks to the projection include the impact of a weaker-than-expected global economic recovery and the reappearance of local Covid-19 (coronavirus disease 2019) infections.

The BSP reaffirmed that changes to the key policy rates of the central bank, which have gone up by 175 basis points since last May, “are aimed to bring inflation and inflation expectations back to the target to ensure the balanced and sustainable growth of the economy in the medium term.”

In line with its principal goal of promoting price stability, the BSP stated that it was ready to use additional policy measures to move inflation toward a target-consistent path over the medium term.

Additionally, the BSP persisted in “urging (for) the) prompt deployment of non-monetary government initiatives to offset the impact of prolonged supply-side pressures on commodity prices.”

It is committed to keeping a close eye on and evaluating any new developments that might affect the nation’s pricing fluctuations and the prospects for the expansion of the economy.

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