DOF: Inflation to fall within 2020 target

The rate of increase in consumer prices would still fall within the government’s target band as long as the Dubai crude price does not surpass the economic managers’ ceiling set for this year, the Department of Finance (DOF) said.

Finance Undersecretary Gil S. Beltran said yesterday that the government has its toolkit to lower inflation should the tensions between the US and Iran further escalate and raise the price of oil in the world market.

But Beltran assured the Bangko Sentral ng Pilipinas (BSP) has “monetary controls,” while the government can increase productions “a bit more” to bring inflation within the target range of 2.0 percent to 4.0 percent.

“We’re still within the target as long as the Dubai crude will not exceed $90 per barrel, otherwise, inflation will rise from the projected,” Beltran said in a phone interview. “Oil prices have always been the determinant of inflation.”

“If President Trump continues then oil prices will not go down from their present levels. We’re monitoring the situation… we don’t know what President Trump will do,” he added.

While the high cost of fuel is bad for consumers, Beltran noted the Bureau of Customs is stand to benefit in terms higher tax collections from the above target prices of imported oil products.

BSP Governor Benjamin E. Diokno already said that inflation will remain within target despite the escalating pensions in the Middle East.

According to Diokno, it is “too early to say” that the mounting tensions between Washington and Iran following a US airstrike that killed a prominent Iranian general would immediately affect Filipino consumers.

“BSP staff estimates that Dubai oil prices have to reach $90 per barrel sustainably (not sporadically) to make a difference in our inflation forecast,” Diokno said in a mobile phone message. “I assign low probability that such an event will happen.”

In December, the Development Budget Coordination Committee estimated that the dollar price of Dubai crude—the benchmark for local prices of oil products—would range $55 to $70 per barrel this year.