MANILA -- The Department of Economic Research of the Bangko Sentral ng Pilipinas (BSP) has adjusted its inflation rate forecast this month, placing it at the 3.9 percent to 4.7 percent range and calling the move a ”slight upward revision.”
In a statement Monday, the BSP attributed the higher inflation projection to geopolitical issues in the Middle East, causing a sharp increase in international oil prices that translates to higher petroleum prices in the domestic market this month.
Based on the oil monitoring of the Department of Energy last week, prices of Dubai crude from April 16 to 20 increased by almost USD2 per barrel relative to the previous week.
“In addition, higher electricity rates in Meralco-serviced areas as well as an increase in the prices of rice due to supply and demand conditions could contribute to additional price pressures,” the central bank added.
“The BSP will continue to monitor closely evolving inflation dynamics over the policy horizon against any signs of incipient price pressures that may warrant a policy response,” it noted.
Inflation rate in March settled at 4.3 percent, higher than February’s rate of 3.8 percent.
In an interview last week, Union Bank of the Philippines President Edwin Bautista said the inflation rates that the country has registered in the past months due to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law is not yet worrying.
“When you look at the effect of TRAIN on some of those items, it has a one-time impact year-on-year. When you adjust, after a while, it’s built-in to the base. So by next year, when you no longer have new factors, the increase will naturally go down,” Bautista explained in Filipino.
He added that despite expectations that the BSP will raise policy rates due to inflationary pressure, it is somehow hesitant to do so considering with the economy’s robust growth and tolerable level of inflation.
The Monetary Board is set to meet next week to plot the appropriate action on the inflation situation. (PNA)
