Inflation may have slowed slightly in May, BSP says
The central bank expects the rate of increase in the prices of basic goods and services to slow slightly in May, as some food items became more affordable during the period, offsetting the increase in fuel prices caused. by rising global demand.
In a statement, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the agency’s economists predicted last month’s inflation rate to be between 4 and 4.8 percent, with a median 4.4%.
The BSP forecast is slightly lower than the inflation rate of 4.5% announced by the government for May, and lower than the regulator’s forecast for last month of 4.2 to 5%.
“Rising prices for domestic meat and petroleum products as well as the upward adjustment in Meralco’s electricity tariffs are the main sources of upward pressure on prices for the month,” Diokno said.
“These could be offset by the fall in the prices of main food products, such as rice, vegetables and fish, due to the improvement in supply conditions, as well as the appreciation of the peso”, he added.
The Philippine Statistics Authority is due to release the inflation rate for May on June 4, Friday.
Markets are closely watching the country’s inflation rate, which has risen in recent months mainly due to a pork shortage caused by an African swine fever outbreak that has decimated the local pork industry.
So far, the central bank has refrained from tightening monetary policy in response to the spike in inflation, saying the price hike was caused by supply-side issues, which cannot be resolved by increasing interest rates.
Instead, the regulator called on the government to ease the tight supply situation by increasing the country’s quota for pork imports.
“Going forward, the BSP will remain attentive to economic and financial developments to ensure that the stance of monetary policy remains consistent with the BSP’s price stability mandate,” said Diokno.
Diokno said earlier that the policy-making Monetary Council believes the prevailing inflation rate regime “is in line with expectations that inflation will remain high this year” due to pressures on the supply side, before settling near the midpoint of the target range next year.
He said that “the balance of risks to the inflation outlook remains balanced around the baseline path in 2021, while tilting downward in 2022.”
To bring down pork prices, President Duterte reduced tariffs and increased the minimum access volume quota to increase domestic supply with more imports amid the African swine fever crisis. INQ
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