BSP sees inf la­tion at 1.9% to 2.7% in June

Business World - - Front Page - Luz Wendy T. No­ble

HEAD­LINE IN­FLA­TION likely set­tled within the 1.9% to 2.7% range in June amid up­side risks from higher prices of oil and rice, the Bangko Sen­tral ng Pilip­inas (BSP) said on Tues­day.

“Higher gaso­line, diesel, and kerosene prices as well as the uptick in the price of rice due to sup­ply bot­tle­necks con­trib­uted to pos­i­tive price pres­sures dur­ing the month,” BSP Gover­nor Ben­jamin E. Dio­kno told re­porters in a Viber mes­sage, cit­ing the June in­fla­tion es­ti­mate range of the BSP Depart­ment of Eco­nomic Re­search.

Global oil prices have risen in re­cent weeks as prospects of re­cov­ery im­prove based on eco­nomic data so far. The decision by ma­jor oil pro­duc­ers to ex­tend record oil cuts to July from the ini­tially planned May to June pe­riod also pushed oil prices higher.

In the Philip­pines, the im­po­si­tion of the ad­di­tional 10% tar­iff on im­ported crude oil con­trib­uted to the rise in pump prices in June. The im­po­si­tion of the ad­di­tional tar­iff, which aimed to gen­er­ate funds for the gov­ern­ment’s pan­demic re­sponse, ended on June 25 with the lapse of Re­pub­lic Act No. 11469 or the Bayani­han to Heal as One Act.

Head­line in­fla­tion in May jumped 2.1% as food and trans­port prices dropped due to the lock­down. This is slower than the 2.2% in April and the 3.2% in the same month of 2019.

For the first five months of 2020, av­er­age in­fla­tion stood at 2.5%, which was within the 2-4% tar­get set by the BSP.

Mr. Dio­kno said down­side risks to in­fla­tion in June in­clude the slightly lower liq­ue­fied pe­tro­leum gas (LGP) prices and elec­tric­ity rates in ar­eas ser­viced by Manila Elec­tric Co. (Mer­alco).

Mer­alco ear­lier this month said over­all rates for June dropped by P0.0216 per kilo­watt-hour (kWh) to P8.7252/kWh from the P8.7468/kWh recorded in May. This means that house­holds’ elec­tric­ity con­sump­tion of 200 kWh, 300 kWh, 400 kWh, and 500 kWh could ex­pect a bill re­duc­tion by P4, P6, P9, and P11, re­spec­tively.

“Look­ing ahead, the BSP will con­tinue to mon­i­tor evolv­ing eco­nomic and fi­nan­cial con­di­tions to en­sure that the mon­e­tary pol­icy stance re­mains con­sis­tent with the BSP’s price sta­bil­ity man­date,” Mr. Dio­kno said.

On Mon­day, Mr. Dio­kno said the cen­tral bank sees in­fla­tion to be be­nign un­til 2022. It slightly raised its av­er­age in­fla­tion forecast for 2020 and 2021 to 2.3% and 2.6% from 2.3% and 2.5%, re­spec­tively.

This “be­nign in­fla­tion en­vi­ron­ment” sup­ported the Mon­e­tary Board’s dovish stance seen through its lat­est de­liv­ery of an­other 50-ba­sis-point (bp) cut on Thurs­day to help soften risks to eco­nomic growth and boost mar­ket con­fi­dence dur­ing the cri­sis. This low­ered down re­verse re­pur­chase, lend­ing, and de­posit rates to record lows of 2.25%, 2.75%, and 1.75%, re­spec­tively.

The Philip­pine Statis­tics Au­thor­ity will re­port the June in­fla­tion data on July 7. —


THE CEN­TRAL BANK sees in­fla­tion to be be­nign un­til 2022.

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