UPSIDE RISKS. The inflation rate slowed anew in March 2023 to 7.6 percent year on year from the previous month's 8.6 percent. However, the Bangko Sentral ng Pilipinas said risks remain tilted on the upside given the supply issues on some food items and the impact of higher fares, electricity rates, and wage hikes. (PNA file photo)
MANILA – The balance of risks to inflation outlook for the next two years is still on the upside despite another slowdown in the rate of price increases, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.
Citing its latest inflation assessment, the BSP said in a statement that “the effect of supply shortages on domestic food prices remains a concern, while the potential impact of higher transport fares, increasing electricity rates, as well as above-average wage adjustments in 2023 point to the broader-based nature of price pressures.”
It said the impact of a weaker-than-expected global economic recovery also continues to be the primary factor that could dampen inflation.
The BSP thus vowed to continue to adjust its monetary policy stance as necessary to “prevent the further broadening of price pressures, as well as the emergence of additional second-order effects."
“The BSP also continues to call for the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation,” it added.
The Philippine Statistics Authority (PSA) reported the second consecutive month of deceleration of inflation rate to 7.6 percent in March from last February’s 8.6 percent, bringing the average inflation for the three-month period to 8.3 percent.
Core inflation, which excludes volatile oil and food items, meanwhile, accelerated to 8 percent last month from 7.8 percent in February.
March’s inflation rate was within the central bank’s 7.4 percent to 8.2 percent projection for the month.
The BSP said it is “consistent with the overall assessment that inflation will remain elevated over the near term before gradually decelerating back to target range towards end-2023.”
The government’s inflation target until 2024 is between 2 percent and 4 percent and the BSP forecast inflation to average 6 percent this year and 2.9 percent next year. (PNA)
