MANILA — The Philippines’ higher-than-target inflation rate of 4.3 percent in March 2018 was not unexpected, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said Thursday.
“Markets are already factoring this,” he told reporters in a WhatsApp message.
In March 2017, inflation recorded a lower rate of 3.1 percent.
The Philippine Statistics Authority (PSA) reported that with the inflation rate’s uptick last month, the average rate in the first quarter stands at 3.8 percent, which is still within the government’s two to four percent target until 2019. It attributed the faster rate of price increases to continued double-digit inflation of alcoholic beverages and tobacco index at 18.6 percent and still elevated rate of the heavily-weighted food and non-alcoholic beverages index at 5.9 percent.
Other contributors are the restaurant and miscellaneous goods and services, three percent; housing, water, electricity, gas and other fuels; 2.9 percent; furnishing, household equipment and routine maintenance of house, 2.7 percent; and health, 2.4 percent. With inflation in the third month of the year already above the full-year target, Espenilla is still mum for a definite adjustment in the central bank’s key rates but stressed that “we are closely monitoring the situation.”
“The coming task of the MB (Monetary Board) is to carefully evaluate the appropriateness of a measured policy response to firmly anchor inflation expectations in line with our forecast that inflation target will continue to be met in 2018-19,” he said. “This can allow as well for orderly adjustment in market rates and in the peso,” he added.
In a statement, the BSP forecasts that average inflation this year will touch the upper end of the inflation target, but it will decelerate to the midpoint of the target next year. “The elevated path of inflation in 2018 along with rising inflation expectations will be continually assessed to guard against potential second-round effects from developing and inflation becoming broader based,” it said.
The statement, however, noted that “non-monetary measures such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash transfers, as well as transport subsidies are expected to help mitigate these inflationary impulses.” It also said that “proposed reforms in the rice industry could also help temper price pressures.”
“The BSP’s decision on the monetary policy stance will remain data-dependent. The BSP will remain vigilant in evaluating price conditions and is ready to take appropriate measures as necessary to ensure that inflation over the policy horizon remains consistent with the target,” it added.
Meanwhile, ANZ Research expects the BSP to keep rates steady this year amid the sustained rise of inflation rate. In a research note, the research arm of ANZ said average inflation to rate is a tad lower than the central bank’s 3.9 percent forecast for the year but the research firm projects a higher average rate of 4.1 percent.
In March 2017, inflation recorded a lower rate of 3.1 percent.
The Philippine Statistics Authority (PSA) reported that with the inflation rate’s uptick last month, the average rate in the first quarter stands at 3.8 percent, which is still within the government’s two to four percent target until 2019. It attributed the faster rate of price increases to continued double-digit inflation of alcoholic beverages and tobacco index at 18.6 percent and still elevated rate of the heavily-weighted food and non-alcoholic beverages index at 5.9 percent.
Other contributors are the restaurant and miscellaneous goods and services, three percent; housing, water, electricity, gas and other fuels; 2.9 percent; furnishing, household equipment and routine maintenance of house, 2.7 percent; and health, 2.4 percent. With inflation in the third month of the year already above the full-year target, Espenilla is still mum for a definite adjustment in the central bank’s key rates but stressed that “we are closely monitoring the situation.”
“The coming task of the MB (Monetary Board) is to carefully evaluate the appropriateness of a measured policy response to firmly anchor inflation expectations in line with our forecast that inflation target will continue to be met in 2018-19,” he said. “This can allow as well for orderly adjustment in market rates and in the peso,” he added.
In a statement, the BSP forecasts that average inflation this year will touch the upper end of the inflation target, but it will decelerate to the midpoint of the target next year. “The elevated path of inflation in 2018 along with rising inflation expectations will be continually assessed to guard against potential second-round effects from developing and inflation becoming broader based,” it said.
The statement, however, noted that “non-monetary measures such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash transfers, as well as transport subsidies are expected to help mitigate these inflationary impulses.” It also said that “proposed reforms in the rice industry could also help temper price pressures.”
“The BSP’s decision on the monetary policy stance will remain data-dependent. The BSP will remain vigilant in evaluating price conditions and is ready to take appropriate measures as necessary to ensure that inflation over the policy horizon remains consistent with the target,” it added.
Meanwhile, ANZ Research expects the BSP to keep rates steady this year amid the sustained rise of inflation rate. In a research note, the research arm of ANZ said average inflation to rate is a tad lower than the central bank’s 3.9 percent forecast for the year but the research firm projects a higher average rate of 4.1 percent.
“We believe that the BSP will stay on hold through 2018,” it added. (PNA)
