MANILA -- Philippine monetary officials are expecting inflation to soar even higher in August, about 5.9 percent, or even higher than a month-ago’s multiyear high of 5.7 percent.
In a statement Friday, the Bangko Sentral ng Pilipinas (BSP) said its Department of Economic Research (DER) forecasts inflation for the month to range between 5.5-6.2 percent. “The central bank forecast implies a slight deceleration of the month-on-month inflation,” it, however, said.
DER traced the upside risks of inflation to increases in the prices of rice and key food items on account of weather-related factors that affected supply.
Other possible contributors are the hike in the prices of gasoline and liquified petroleum gas (LPG) as well as the rate of electricity in areas being serviced by the Manila Electric Company (Meralco). “Meanwhile, lower diesel and kerosene prices as well as modestly appreciated peso could partly temper price pressures this month,” the statement said.
“The BSP will remain watchful of economic and financial developments that could affect the inflation outlook and will closely monitor inflation expectations and emergence of further second-round effects ahead of the September 2018 Monetary Board policy meeting,” it added.
Meanwhile, Budget and Management Secretary Benjamin Diokno said a further rise in the inflation rate is not worrisome noting that the country has registered inflation levels higher than the current levels.
He explained that people should look at inflation developments based on the monthly turn-out and not the year-on-year basis because the difference would be very apparent due to base effect. “Month-on-month shows the acceleration or deceleration of inflation,” he told reporters Friday.
Diokno also expressed confidence that the domestic economy can still absorb the uptrend in inflation. “To me, I’m more for real growth and employment. Those are more important,” he said.
Data from the Philippine Statistics Authority (PSA) showed that employment rate in April 2018 stood at 94.5 percent. Growth, as measured by gross domestic product (GDP), remains high, with the first quarter figure at six percent, among the strongest in the region. (PNA)