MANILA – The rate of domestic price increases posted its 17-month high of 3.3 percent last November, exceeding expectations, but Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno believes this development to be transitory.
Last November’s inflation figure is higher than the previous month’s 2.5 percent and surpassed the central bank’s 2.4 to 3.2-percent target band, which the Philippine Statistics Authority (PSA) attributed mainly to the faster inflation rate of the heavily-weighted food and non-alcoholic beverages.
The inflation rate of the alcoholic beverages and tobacco index also accelerated contributing to the uptick last November, but average inflation in the first 11 months this year stood at 2.6 percent, the PSA reported.
In a Viber message to journalists Friday, Diokno said the average inflation until the next two years is projected to remain within the BSP’s 2-4 percent target band “as the impact of supply disruptions due to recent typhoons is expected to be largely transitory.”
He said risks to both the global and domestic economies remain at the downside amid the positive news on the coronavirus disease (Covid-19) vaccines.
Diokno thus underscored the need to address logistical challenges for the distribution of the vaccine “before the recovery could resume.”
He cited the near-term uncertainty given the resurgence of Covid-19 infections in the US, Europe, and some Asian countries.
Any move to re-implement lockdowns “could further dampen economic recovery, he said.
“The BSP stands ready to deploy its full arsenal of instruments, as needed, in fulfillment of its mandate to maintain price and financial stability conducive to sustainable economic growth and employment,” he added.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort believes the acceleration of inflation last November was temporary, tracing this to the impact of Typhoons Ulysses and Rolly, which ravaged parts of Luzon.
“This could somewhat temper/limit any further monetary easing measures for now, especially and particularly on local policy rates, currently at the record low of 2 percent (way below inflation; negative net interest rates),” he added. (PNA)
