PRICE PRESSURE. Higher prices of oil and non-oil commodities continue to push domestic inflation rate up, with the July 2022 print accelerating to 6.4 percent. The Bangko Sentral ng Pilipinas (BSP) committed to use all policy measures to help address the rising inflation rate while supporting the government's non-monetary measures to address supply constraints. (PNA file photo)

MANILA – Broadening price pressures due partly to higher oil prices continue to accelerate domestic inflation rate but the Bangko Sentral ng Pilipinas (BSP) committed its readiness to do necessary policy actions to ensure price stability.

This, after the Philippine Statistics Authority (PSA) reported on Friday that domestic rate of price increases rose further to 6.4 percent last July, the fourth consecutive month it breached the government’s 2-4 percent target band, and the highest rate since October 2018.

The average inflation in the first seven months this year stood at 4.7 percent.

Inflation last June stood at 6.1 percent while it was at 3.7 percent in July 2021.

In a statement, the BSP said the inflation print last month is within its 5.6 to 6.4 percent target range for July and is consistent with its “assessment of elevated price pressures over the near term on firmer indication of second-round effects.”

It said emerging second round effects like hikes in minimum wages and transport fares due largely to the elevated global oil and commodity prices, and the rising inflation expectations broaden price pressures.

The BSP said risks are coming from the impact of the Russian-Ukraine conflict on prices of non-oil commodities in the international market, as well as the potential second-round impact of elevated oil prices on prices of goods and services.

“Domestic food prices also pose upside risks due to shortages in the supply of several key food items,” it added.

The BSP said “a slower-than-expected global recovery due to tighter global monetary policy conditions and the continued uncertainty from the Covid-19 (coronavirus disease 2019) pandemic continues to present a downside risk to the outlook.”

The BSP thus ensures its bid to “take all necessary policy action to bring inflation toward a target-consistent path over the medium term and deliver on its primary mandate of price stability.”

It said the total of 125 basis points increase in the central bank's key rates since last May “should help moderate inflation expectations.”

“At the same time, the BSP reiterates its support for the carefully coordinated efforts of other government agencies in implementing non-monetary interventions to mitigate the impact of persistent supply-side factors on inflation,” it said.

The statement added the central bank’s policy-making Monetary Board (MB) “will review its assessment of the inflation outlook along with the latest GDP (gross domestic product) outturn in its monetary policy meeting on 18 August 2022.”

The BSP’s average inflation forecast for this year is 5 percent, higher than the target band due largely to elevated prices of oil and non-oil commodities in the international markets, and supply constrains for several food items in the country. (PNA)