The Bangko Sentral ng Pilipinas (BSP) expects that 2022’s inflation will remain high relative to the national government’s 2 to 4 percent target. This comes after the Philippine Statistics Authority (PSA) announced August’s headline inflation slowed to 6.3 percent year-on-year, after rising for five months.
“The BSP’s baseline projections continue to indicate above-target inflation in 2022, with inflation decelerating back to the target in 2023 and 2024 following the recent BSP policy rate hikes,” they said in a statement.
BSP identified what they described as “upside risks” that are likely to affect inflation.
“... Upside risks continue to dominate the inflation outlook in the near term due to the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, the sharp increase in the price of sugar, as well as pending petitions for transport fare increases,” they said.
They also saw that the global economic recovery was weaker than expected, due to COVID-19 cases going on the rise again.
BSP increased their rates by 3.75 percent on August 18, a contractionary move done in an attempt to tame inflation and to “ensure the balance and sustainable growth of the economy in the medium term.”
They also called on the government to implement “non-monetary government interventions” to ease the supply-side blow to rising prices of commodities.
The central bank will meet again on September 22 to review the economy and decide whether or not they will raise interest rates again.
Meanwhile, House Senior Deputy Minority Leader and Northern Samar 1st District Representative Paul Daza said the public should temper their expectations on a decrease in consumer prices after the government reported a lower inflation rate last month.
The Philippines' inflation rate decelerated to 6.3 percent last August after a five-month rise.
Daza said the statistical data should not be taken at face value and its implications must be better understood.
“On social media, there appears to be this widespread notion that there will soon be a reduction in the price of goods, and that marketing and grocery bills will now be lessened,” Daza said.
Mark Ernest Famatigan is a news writer who focuses on Philippine politics. He is an advocate for press freedom and regularly follows developments in the Philippine economy. The views expressed are his own.
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