THE Bangko Sentral ng Pilipinas (BSP) sees the country’s inflation to likely remain elevated in the coming months, reflecting the impact of supply constraints on domestic prices of key food commodities such as meat and vegetables as well as the recent uptick in international oil prices.
Because of this, business leaders in Cebu said both manufacturers and the government should collaborate for unhampered access of commodities and implement mechanisms to tame inflation.
Felix Taguiam, Cebu Chamber of Commerce and Industry president, said stakeholders should work to ensure continued supply of commodities in Cebu.
“Let’s just hope whatever supply chain we currently have will reach our ports and our logistics will remain unhampered. This will be good for our goods to reach our manufacturing hubs, from food (production) to the consumers,” he said.
Taguiam said the coronavirus pandemic has continued to paralyze the economy as reflected by high inflation and negative gross domestic product growth.
The inflation rate jumped to 4.2 percent in January 2021, the highest since February 2019.
This was also higher than the 3.5 percent posted in December 2020, the 2.9 percent in January 2020, and the BSP’s forecast of 3.3 to 4.1 percent for the month.
The Philippine Statistics Authority said higher prices of the heavily weighted food and non-alcoholic beverages pushed overall inflation up in January.
In its Feb. 11 meeting, the Monetary Board decided to maintain the interest rate on the BSP’s overnight reverse repurchase facility at two percent. The interest rates on the overnight deposit and lending facilities were likewise kept at 1.5 percent and 2.5 percent, respectively.
It noted that the latest baseline projections show inflation returning to within the target range of two to four percent over the policy horizon as supply-side influences subside. The Monetary Board also noted that inflation expectations continue to be anchored within the inflation target band.
Mandaue Chamber of Commerce and Industry president Steven Yu said if the government can timely increase the supply of pork, chicken and vegetables through importation or other means, an increase in prices can be averted and slow down inflation.
“Other countries resort to importation to ease the squeeze in supply as a temporary measure, but there are also other means available to achieve this end,” he said.
Yu said crude oil prices are trending higher but are expected to correct once the supply is increased.
“We look up to the US to take leadership to resolve this global issue,” he said.
While inflation is poised to spike because of these factors, business leaders think the spike will only be temporary and will slow down in the second half of this year.
“Full-year inflation targets remain attainable. We expect our national government to successfully tame inflation by increasing the supply side, and we expect global oil prices to be subdued by the US and other world powers to spur economic recovery post-pandemic,” he said. (JOB)