Rate of rise in consumer prices seen to be stable

Consumer prices are expected to be stable this month as declining rice prices offset hikes in fuel costs and power rates, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement Friday, the BSP said benign price pressures gave it room to consider policies that would help boost economic output.

“Price pressures may come from the upward adjustments in local pump prices of oil and power rates,” BSP Governor Amando M. Tetangco Jr. said. “However, the higher energy prices may be offset by the continued decline in rice prices.”

Inflation in April would likely fall between 1.9 and 2.8 percent. This is broadly in line with the 2.4-percent average rise in consumer prices recorded in the first quarter of the year.

For the whole of 2015, the BSP expects inflation to average 2.3 percent, implying further room for prices to stabilize further in the coming months.

The BSP’s main goal is to protect the consumers’ purchasing power by keeping prices stable. This is done through adjustments in interest rates the BSP pays for banks’ deposits which, in turn, influences prices on loans taken out by consumer and businesses.

Demand conditions that affect prices are also controlled through the management of the amount of money circulating in the domestic economy. The BSP wants to ensure that the country’s moneys supply remains enough to keep the engines of the economy running. Having too much money in the economy, however, tends to artificially inflate prices.

In April, Tetangco said, inflation pressures likely came from adjustments in fuel prices and higher power. On the other hand, food costs continued to go down, particularly that of rice.

“The BSP will continue to monitor emerging price trends and adopt appropriate policies,” Tetangco told reporters.

Throughout 2015, the BSP wants to keep inflation between 2 and 4 percent—the lowest target ever set in the country’s history.