BSP: PRICES OF GOODS, SERVICES TO STABILIZE NEXT YEAR

Despite all the talk of increasing prices of goods and services— and the actual headline inflation rates having risen above expectations these last two months— the central bank yesterday said that it expected the situation to normalize by next year.

At the same time, the Bangko Sentral ng Pilipinas adjusted upward its inflation rate forecast for 2018, but moved down slightly its projection for 2019.

In a press briefing, BSP Deputy Governor Diwa Guinigundo said monetary planners expected the prices of goods and services in the local economy to rise by an average of 3.9 percent for all of this year, a slight upward adjustment from the old forecast of 3.8 percent, using 2012 as a base year for prices.

Using the older 2006 base year, the inflation for 2018 is expected to rise to 4.5 percent from the old forecast of 4.3 percent, Guinigundo said.

Despite this, the central bank said it believed that the acceleration of price increases were “transitory” in nature and caused by, among others, the increase in the international prices of crude oil, rising prices of rice and other basic goods and services.

Previously, central bank statements had also cited the Duterte administration’s tax re- forms that went into effect this year as having affected the prices of basic commodities.

The central bank said, however, that prices should stabilize on their own by 2019 even without any help from the Monetary Board, which decided on Thursday to keep its key interest rate unchanged—a tool used mainly to counter inflationary effects by making funds more expensive and, in turn, capping inflation by reining in economic growth.

For next year, Guinigundo said the central bank expected the inflation rate to actually decline slightly to 3 percent from the old forecast of 3.1 percent under the 2012 base year scheme.