Rate of rise in consumer prices seen moderate
Drop in global oil may have slowed inflation in JuneBy Michelle V. Remo
Philippine Daily Inquirer
The rate of rise in the country’s consumer prices is expected to remain benign in June on the back of falling oil prices in the global market.
Monetary officials said the tempered growth in the prices of goods and services also encouraged firms to undertake more investment activities.
According to the Bangko Sentral ng Pilipinas, inflation may settle between 2.5 and 3.4 percent in June. This is much slower than the 5.2 percent registered in the same month last year.
From January to May, the average increase in the prices of goods and services purchased by average Filipino households was reported to be modest due to favorable price movements of oil and other imported goods.
Inflation in the first five months of the year averaged at 3 percent, prompting the BSP to project that the full-year average could settle close to the lower end of the official inflation target of 3 to 5 percent.
Also, average inflation for the first half of the year could hit 2.9 or 3 percent, given the central bank’s inflation forecast for June.
This forecast continues to support the government’s view that “inflation is manageable,” BSP Governor Amando Tetango Jr. said.
Tetangco and other monetary officials believe that the benign inflation environment in the country has enabled domestic firms to invest more.
They said the manageable increase in prices encouraged Filipino households to spend more and helped boost overall domestic consumption.
The moderate increase in consumer prices was the reason why the BSP decided to keep interest rates steady in the last policy rate-setting meeting of the Monetary Board.
The central bank’s policy rates, which influence commercial interest rates, were kept at 4 and 6 percent for overnight borrowing and lending, respectively.
The BSP said that its Monetary Board decided to keep the policy rates steady on June 14 because, according to latest estimates, consumer prices would continue to post moderate increases over the short term.
“Nevertheless, the BSP is watchful of developments in the global front that could affect our … growth dynamics. We will make adjustments to our policy stance when needed,” Tetangco said.
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