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Inflation picked up to a 14-month high of 1.9 percent in June on higher food and beverage prices, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.
The rate of increase in the prices of basic goods last month was the fastest since the 2.2 percent posted in April last year. Inflation in June was also faster than the 1.2 percent recorded a year ago and 1.6 percent a month ago.
In a text message to reporters, BSP Governor Amando M. Tetangco Jr. attributed the higher rate last June “mainly to greater annual increases in food and nonalcoholic beverages” alongside price hikes in other nonfood items.
“This turnout is consistent with our assessment that over the policy horizon, monthly inflation will move to within target, although for 2016 we still see the full year average to be just below/around the low end of the national government’s target range” of 2-4 percent. Tetangco said.
At its policy meeting last month, the BSP’s Monetary Board slightly cut its inflation forecast for 2016 to 2 percent from 2.1 percent previously on the back of a slower wage hike implemented in midyear.
“We see no need to change the stance of monetary policy for now. But we will continue to monitor developments, particularly the policy actions of advanced economies, including the Fed, in light of Brexit,” Tetangco said.
Tetangco earlier warned of spill over effects in domestic markets, which are expected to be more volatile in the near term, as a result of the United Kingdom’s vote to leave the European Union, hence severing not only political but also economic ties with the mainland.
The BSP was nonetheless “ready to provide liquidity to our market as needed” amid external jitters, Tetangco had said.
Moving forward, “the market will also continue to monitor how the economic team will implement the government’s policy agenda,” the BSP chief added, referring to the Duterte administration’s 10-point economic agenda aimed at significantly slashing the poverty rate.
Duterte’s 10-point socioeconomic agenda include:
- continuing and maintaining current macroeconomic policies, including fiscal, monetary and trade policies;
- instituting progressive tax reform and more effective tax collection while indexing taxes to inflation, in line with the plan to submit to Congress a tax reform package by September;
- increasing competitiveness and the ease of doing business, drawing upon successful models used to attract business to local cities such as Davao, as well as pursuing the relaxation of the Constitutional restrictions on foreign ownership, except with regards land ownership, in order to attract foreign direct investments;
- accelerating annual infrastructure spending to account for 5 percent of the gross domestic product, with public-private partnerships playing a key role;
- promoting rural and value chain development towards increasing agricultural and rural enterprise productivity and rural tourism;
- ensuring security of land tenure to encourage investments and address bottlenecks in land management and titling agencies;
- investing in human capital development, including health and education systems, as well as matching skills and training to meet the demands of businesses and the private sector;
- promoting science, technology and the creative arts to enhance innovation and creative capacity towards self-sustaining and inclusive development;
- improving social protection programs, including the government’s conditional cash transfer program, in order to protect the poor against instability and economic shocks;
- and strengthening the implementation of the Responsible Parenthood and Reproductive Health Law to enable, especially, poor couples to make informed choices on financial and family planning./rga