MANILA – The deceleration of the domestic inflation rate, which is steady at 4.5 percent last May, depends on the normalization of pork supply with the help of the temporary tariff cut on imported pork.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, in a message to reporters on Friday, said last month’s inflation print is within their 4 percent to 4.8 percent projection for the month and is in line with their expectations of an elevated rate during the quarter because of pork supply constraints and high oil prices.
He, however, reiterated monetary authorities’ forecast of inflation deceleration to within the 2 percent to 4 percent target band starting in the second half of the year until 2022 once supply stabilizes.
“The implementation of the temporary reduction in tariffs on imported pork is seen to address supply constraints and ease price pressures on meat products going forward. Thus, the projected decline of inflation depends crucially on the timely arrival of pork to help stabilize domestic prices,” he said.
With the rate of price increases steady for the third consecutive month last May, average inflation to date stood at 4.4 percent.
Monetary authorities project inflation to average at 3.9 percent this year.
Diokno said central bank officials are “of the view that risks to the inflation outlook are broadly balanced.”
“The risks relate to the arrival of pork imports at lower tariffs, the successful reopening of the domestic economy, and the pace of the global economic recovery,” he said.
He said the latest inflation development will be among the factors the policy-making Monetary Board will consider during its rate-setting meet on June 24.
“The BSP remains watchful over the evolving economic conditions and challenges brought about by the pandemic to ensure that the monetary policy stance remains consistent with its price and financial stability objectives,” he added. (PNA) -rir
