Inflation likely picked up again in August, BSP says

THE growth of consumer prices likely accelerated anew in August this year after slowing down in the previous month, the central bank governor told reporters on Tuesday.

In a message to reporters, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said inflation in the country will still hover above the ceiling of the government’s 2-percent to 4-percent target range for the year.

In particular, Diokno said inflation likely settled within the 4.1 percent to 4.9 percent range in August. The July inflation print was at 4 percent.

The governor said higher prices for liquefied petroleum gas (LPG), electricity and key food items were the sources of upward price pressures during the period. Diokno added that the depreciation of the peso also played a role in inflationary pressures during the month.

“These could be offset in part by the decline in domestic petroleum and rice prices,” the governor said.

In its August monetary policy meeting, the BSP pushed through with maintaining monetary policy settings despite revising their inflation assumption upward for the year.

BSP officials said inflation is expected to average at 4.1 percent for 2021. For next year up to 2023, inflation is expected to average at 3.1 percent, returning back to the midpoint of the target range.

Also in its statement on the net outflow of foreign portfolio investments (FPI) in July, the BSP the relatively high inflation in 2021 was among the factors as to why there were the higher withdrawals of investments during the month.

Diokno vowed that the BSP will remain vigilant on the price front and its effect on economic recovery.

“Moving forward, the BSP will continue to monitor emerging price developments to help ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved,” the governor said.